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Europe's STOXX 600 flat on rising Middle East tensions, energy stocks spike

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Main energy stocks index hits highest since 2008

Zurich Insurance falls on ex-dividend trade

Varta's restructuring woes send shares sliding

Updates with closing prices

By Ankika Biswas, Johann M Cherian and Ozan Ergenay

April 12 (Reuters) -European shares were flat on Friday after hitting a one-week high in early trade, as rising tensions in the Middle East eroded some of the continued optimismaround the European Central Bank's hint of imminent rate cuts.

The pan-European STOXX 600 .STOXX ended the session0.1% higher, after rising as much as 1.2% during the day, but logging its second straight weekly decline.

After an early trade rally, benchmarkindexes in major economies such as Germany .GDAXI and France .FCHIclosed in the red, while that of Italy .FTMIB and Spain .IBEX closed off the day's highs.

The euro STOXX volatility index .V2TX climbed to its highest level since October, reflecting some investor anxiety.

Automobiles .SXAP and travel leisure .SXTP led sectoral declines, while theenergy sector .SXEP jumped2.4% to its highest level since 2008 owing to higher oil prices,geopolitical risks, and global economic uncertainty.

"It all smells of geopolitical risk coming through ... now we have a much more risk-off move," said Andreas Bruckner, European equity strategist at BofA Global Research.

Luxury giants LVMH LVMH.PA and Richemont CFR.S lost1.2% and 3%, respectively, weighing on the STOXX 600. The broader luxury sector .STXLUXP shed1.3% to a near two-month low.

Investors meanwhile drew some comfort from unchanged final March inflation readings from top economies in the eurozone, includingGermany,France andSpain.

Optimism around interest rate cuts by major central banks this year had buoyed European shares since late 2023, with the ECB hinting rates could be lowered , as early as June.

As for other sectors, basic resources .SXPP jumped 2.4% to a near one-year high as copper prices jumped to their highest since June 2022.

Among top gainers, Orsted ORSTED.CO climbed4.5%.Oddo BHF upgraded the Danish renewable energy group to "outperform" from "neutral", while Evotec EVTG.DE rose3.5% afterDeutsche Bank upgraded the German biotech firm to "buy" from "hold".

Societe Generale SOGN.PAgained 2.1% after thelender agreed to sell Société Générale Marocaine de Banques and La Marocaine Vie to Moroccan conglomerate Saham Group for 745 million euros ($797.45 million).

VartaVAR1.DE slumped 31.1% after the German battery maker said its restructuring plans would fail to make it profitable by 2026.

Zurich Insurance <ZURN.S> dropped 3.8% as the Swiss group traded ex-dividend.

Chocolate maker Barry Callebaut BARN.S dropped5.5% after jumping nearly 12% in two days following higherfirst-half sales volumes on Wednesday.

Reporting by Johann M Cherian, Ozan Ergenay and Ankika Biswas; Editing by Savio D'Souza, Sohini Goswami and Chris Reese


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