On Tuesday, the Spanish IBEX 35 stock index extended the previous day's rally and was already glimpsing the psychological level of 11,000 points, encouraged by the feeling of geopolitical de-escalation and the assimilation of a new monetary horizon.

However, caution was called for by the macroeconomic data to be published at the end of the week (US GDP and consumer deflator on Thursday and Friday, respectively), while investors analyze the figures of the recently initiated corporate results season.

Bankinter analysts pointed out, in any case, that the market could have digested the worsening of the international policy scenarios -greater risk of escalation in the Middle East- and monetary -higher interest rates for longer--, so there is potential for rises in equities.

"We identify 2 constructive conclusions derived from what has transpired so far in April and 2 conceptually powerful benchmarks that will drive the market throughout this week," they said in a report this week.

"Constructive Conclusion 1: We consider it highly likely that the tightening in bonds (rising IRRs, falling prices) resulting from a more hawkish view on rate cuts, especially from the Fed, is now over. Constructive conclusion 2: The market learns to live with a more sensitive, higher-risk geo-strategy in view of the modest impact of Israel's retaliation on Iran. Both conclusions have constructive effects on the market," they explained.

Iran said Friday it did not plan to retaliate after an apparent Israeli drone strike within its borders, which itself followed an unprecedented Iranian missile and drone strike against Israel days earlier. Tehran downplayed the attack, which was interpreted as a sign of regional de-escalation.

In addition, the PMI business surveys for April will be released during the day, which according to analysts at Renta 4 could point to "stability in the American and British cases, while we could see an improvement in both the manufacturing and services components in the Eurozone".

At 0705 GMT on Tuesday, Spain's selective IBEX 35 stock index was up 75.10 points, or 0.69%, to 10,965.80 points, its highest level since April 4, when it still closed above 11,000 points. The FTSE Eurofirst 300 index of large European stocks advanced 0.66%.

Enagás fell by almost 1% after announcing its first-quarter figures, which showed a decline in its net operating profit.

In the banking sector, Santander rose 0.85%, BBVA gained 1.05%, Caixabank advanced 0.56%, Sabadell gained 0.67%, and Bankinter lost 0.11%.

Among the large non-financial stocks, Telefónica gained 0.39%, Inditex advanced 1.46%, Iberdrola gained 0.17%, Cellnex gained 0.74%, and the oil company Repsol rose 0.74%.

(Information by Tomás Cobos; edited by Benjamín Mejías Valencia)