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when necessary”.

In stock markets trading, European indices jumped around 1.5 percent approaching the half-way stage yesterday.

Asian markets earlier closed with strong gains, led by Tokyo which won nearly three percent.

“European markets are following the wider global theme of optimism as rumours swirl around the apparent negotiations that could lead us out of the conflict in Iran,” said Joshua Mahony, chief market analyst at Scope Markets.

“Dip buyers have started to grab what they can, while oil prices shift lower as the perceived length of time associated with the disruption shortens.”

European Central Bank chief Christine Lagarde said the ECB has several options for dealing with the energy shock, vowing policymakers would not be “paralysed by hesitation”.

At its most recent meeting last week, the ECB kept interest rates on hold, while warning of higher inflation and lower growth in the eurozone owing to the war.

However, analysts have raised bets on the central bank hiking borrowing costs as soon as next month to try and keep the lid on an expected surge in consumer prices.

Hopes of an end to the Middle East conflict surfaced after the New York Times quoted unnamed officials saying that Washington had sent a 15-point peace proposal via Pakistan.

Israel’s Channel 12 said that Trump was suggesting a one-month ceasefire during which they would discuss handing over Iran’s enriched uranium and banning further enrichment.

The Israeli report added that Tehran would ensure safe passage through the Strait of Hormuz, while Iran would see an end to all sanctions and receive assistance in developing civil nuclear energy.

The strait, through which one fifth of global oil and gas normally flows, has largely been blockaded by Iran.