The IBEX 35 surged at Tuesday's open following an announcement by Donald Trump of a ceasefire between Iran and Israel, reigniting investor appetite for risk assets such as equities and putting downward pressure on oil and gold prices.

The US President confirmed that the truce is already in effect and urged both nations not to violate it, just hours after Iran launched waves of missiles that, according to Israel's ambulance service, resulted in four fatalities.

Although questions remain regarding the cessation of hostilities between the two longstanding Middle Eastern adversaries, markets opted for buying, propelling the Spanish stock index close to the 14,000-point mark.

The IBEX 35 had previously fallen below this symbolic level--which it reclaimed in mid-May after seventeen years beneath it--amid the recent exchange of strikes between Israel and Iran. The conflict had prompted a flight to safe-haven assets such as gold and driven up oil prices on fears that the unrest could curtail crude supply.

As the market weighs the prospects for a reduction in Middle East tensions, short-term attention is shifting to the upcoming NATO meeting, the IFO business confidence index in Germany, and US Federal Reserve Chair Jerome Powell's testimony before Congress.

"We expect Powell to reiterate his 'wait and see' approach regarding where tariffs will ultimately settle, so as to properly gauge their implications for growth and inflation (...), and therefore determine the scale and pace of interest rate cuts," analysts at brokerage Renta 4 said.

According to LSEG's IRPR interest rate futures tool, markets are currently pricing in a total of 58 basis points of rate cuts this year, with the first reduction expected in September.

As of 0702 GMT on Tuesday, Spain's benchmark IBEX 35 was up 179.90 points, or 1.30%, at 14,019.30, while the pan-European FTSE Eurofirst 300 index advanced 1.17%.

In the banking sector, Santander gained 2.63%, BBVA rose 2.93%, Caixabank advanced 2.77%, Sabadell climbed 2.72%, Bankinter was up 2.02%, and Unicaja Banco increased by 2.50%.

Among major non-financial stocks, Telefónica added 0.31%, Inditex climbed 1.51%, Iberdrola slipped 0.54%, Cellnex dipped 0.06%, and oil company Repsol fell 4.60%.

(Reporting by Tomás Cobos; editing by María Bayarri Cárdenas)