The Spanish stock index IBEX 35 continued on Thursday with the upward trend started the day before, crossing its fingers in the hope that the feared escalation of violence in the Middle East will not materialize.

Contributing to the improvement in the mood of equities was the fall in the price of oil, in the absence - for the time being - of a military response by Tel Aviv to the Iranian attack of the weekend.

Still, calm in the markets seemed precarious due to high geopolitical tensions, especially after comments by Israeli Prime Minister Benjamin Netanyahu, who defied Western countries calling for restraint by stating that Israel will make its own decisions on how to defend itself.

The Iranian attack followed the bombing of Tehran's consulate in Damascus, an attack blamed on Israel in which senior Iranian military commanders were killed.

Fears that Israel's war on Gaza will go international have weighed on markets in recent weeks, as has the gradual retreat from interest rate cuts in the United States.

In recent hours, more comments have come from US Federal Reserve (Fed) officials advocating against rushing to lower borrowing costs in view of the strong economy and inflation.

Michelle Bowman, a Fed governor, said that progress in reducing inflation in the U.S. may have stalled and it remains an open question whether interest rates are high enough to ensure a return to the Fed's 2% target.

By contrast, markets are more confident that the European Central Bank (ECB) will begin cutting rates in June, although the next steps of the institution chaired by Christine Lagarde are in doubt.

In fact, the conflict in the Middle East has cast doubt on the ECB's path of cheap money, as a rise in oil prices could push inflation up again.

Against this backdrop of monetary and geopolitical musings, the markets focused for the time being on companies' quarterly reports, in the absence of any major macroeconomic indicators during the session.

In this regard, Bankinter kicked off the Spanish banking results season with a 9% increase in first-quarter profit. The bank reacted on the stock market with a fall of around 1.2%.

In the rest of the banking sector, the upward trend also prevailed: Santander rose 1.10%, BBVA gained 0.98%, Caixabank advanced 1.00%, Sabadell gained 1.25% and Unicaja Banco rose 1.62%.

Among the large non-financial stocks, Telefónica gained 0.28%, Inditex advanced 0.23%, Iberdrola gained 1.25%, Cellnex fell 0.03%, and the oil company Repsol lost 0.86%.

Naturgy continued to attract attention in the Spanish energy sector, after it was confirmed on Thursday that the Saudi Arabian Taqa is negotiating with Naturgy's current shareholders to launch a takeover bid for the Spanish company. On Thursday, the energy company's shares rose more than 4% on speculation about the price of the eventual bid.

As for the IBEX 35, at 0705 GMT on Thursday, it was up 74.50 points, 0.70%, to 10,708.40 points, adding between Wednesday and Thursday an increase of some 180 points, although it is still far from the more than 11,100 points reached at the end of March.

For its part, the FTSE Eurofirst 300 index of large European stocks advanced by 0.22%.

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