April 17 (Reuters) - The STOXX 600 jumped more than 1% and notched its fourth straight weekly gain on Friday, after Iran announced that the Strait of Hormuz, a conduit for a fifth of the world's energy shipments, was now open.
The vital waterway can be used by all commercial vessels for the remainder of the truce agreed in Lebanon, Iranian Foreign Minister Abbas Araqchi said.
Global markets rallied on the news, with Wall Street indexes near record highs, while oil prices plunged as much as 11%.
The pan-European stock index climbed 1.6% to 626.58 points, close to levels seen before the beginning of the conflict.
Euro zone short-dated government bond yields dropped sharply to one-month lows, while money markets scaled back bets on future ECB rate hikes.
Most regional bourses also moved higher, with Germany's DAX, Spain's IBEX 35 and France's CAC 40 gaining about 2% each.
European equities have underperformed U.S. peers over the course of the conflict, reflecting the region's high dependence on external oil and gas supplies, with inflation worries intensifying as oil prices soared.
"The way the market is reacting, there are signs that (the reopening) could be something more meaningful and hopefully sustainable, and we can move on from this to some extent," said Ciaran Callaghan, head of European equity research at Amundi.
Callaghan added that the duration of the conflict has been key in determining its impact on companies and the wider economy, and that the relief rally was a sign that investors hoped more reasonable thinking might prevail.
Travel and luxury stocks were the biggest gainers, jumping over 4% each.
LVMH, Hermes and Gucci-owner Kering all rose over 1.5%, after tumbling earlier in the week on warnings that the war was impacting sales.
Airlines, hit by the sharp increase in fuel costs and lower bookings, also recovered, with Ryanair, Lufthansa and easyJet up between 6% and 7.5%.
The aerospace and defense index jumped 3.1%, while euro zone banks gained 3.3%.
Energy shares slid 4.2% as oil prices plunged, however, with heavyweights Shell and BP losing 5.6% and 7.4%, respectively. Utilities were down 1.4%.
Among other notable movers, Alstom slumped 27% after the French train maker pulled its three-year cash flow forecast, its second major cash warning since late 2023.
Online food ordering firm Delivery Hero gained 5.2% after Uber raised its stake in the company.
On the economic front, European Central Bank President Christine Lagarde said the ECB needed to remain vigilant as the war could drag euro zone growth lower and push inflation above already increased projections.
(Reporting by Ragini Mathur and Twesha Dikshit in Bengaluru; Editing by Jonathan Ananda)
By Twesha Dikshit and Ragini Mathur
