New hope of a diplomatic breakthrough in the Middle East dragged oil prices lower and injected renewed optimism into the market, with European shares rising on Friday with major indexes jumping more than 1%. Brent crude futures fell 3.7%, extending the previous session’s losses, after US President Donald Trump scrapped plans to strike Iran and said a deal could be done as soon as this weekend.

The pan-European STOXX 600 index rose 1.9% to 633.21 points, up 1.7% for the week.

Spain’s IBEX 35 index outperformed regional peers, climbing more than 2.6% and hitting an all-time high.

“After a week or two, in which you’ve actually seen a little bit of two-way price action, mostly to the downside… it’s given sentiment across Europe that it’s been looking for,” said Chris Beauchamp, chief market analyst at IG Group.

“European stocks are still cheaper than their US counterparts, especially in tech… Maybe it’s time for investors to look again at European stocks with more confidence given the lower valuations.” The upbeat end to the week followed a period of great turmoil for European shares, with sharp swings in AI-linked tech stocks, pressure on UK-listed banks due to tighter regulations in China and a quarter-point rate hike by the European Central Bank.

Traders still expect borrowing costs to rise another 25 basis points before the end of the year, according to data from LSEG. Only energy shares were the laggards on Friday, tracking lower crude prices down 1%. Travel and leisure stocks were the day’s top performers, rising 4.1% to a five-month high. Airlines Lufthansa and Air France added 5.2% and 8.4% respectively, while integrated tourism group TUI AG jumped 8.7%.

The STOXX 600 banks index led the sector’s gains with a gain of 4.3%, with Deutsche Bank and Societe Generale each gaining more than 6%. Acciona Energia jumped 13% after media reports that global infrastructure funds were lining up a stake in the Spanish renewable energy firm. Its parent, construction and energy conglomerate Acciona, also rose 10.4%. Novo Nordisk added 1.7% after Britain’s medicine regulator approved the drugmaker’s weight-loss pill on Thursday, making the UK the first market in Europe where patients can use the oral treatment. On the data front, German inflation eased slightly to 2.7% in May, while Britain’s economy shrank 0.1% in April.

Global investors closely watched the US market, where SpaceX shares jumped more than 20% in its Nasdaq debut on Friday, valuing it at more than $2 trillion.