* Auto, chemical stocks among top gainers; renewables
decline
* Naturgy falls after CVC Capital Partners exits €4 bln
stake
* Iran war fallout amplifying Europe's financial
vulnerabilities, ECB warns
(Updates with closing levels)
By Johann M Cherian and Ragini Mathur
May 27 (Reuters) - European shares ended little changed
on Wednesday, holding near record levels reached before the Iran
war began, as gains in automobile and chemical stocks offset
lingering concerns over the conflict and its potential impact on
energy markets.
The pan-European STOXX 600 index closed up 0.03% at
628.18 points after trading modestly higher earlier in the
session and about 1% below its all-time high touched before the
conflict began in late February.
Markets took some comfort from a pullback in oil prices, with
Brent crude down 3.2%, even as investors continued to
track mixed signals from Washington and Tehran.
Iran's state TV said it had obtained a draft of an unofficial
framework for an initial understanding between the United States
and Iran to end the conflict. It said it included a provision
for Tehran to restore shipments through the Strait of Hormuz to
pre-war levels within a month, but the White House dismissed the
report as false.
On Tuesday, Iran accused the U.S. of violating a ceasefire,
raising fresh doubts over the durability of peace efforts.
"Europe is more exposed than the U.S. to the economic
transmission channel of the conflict, which is obviously related
to energy," Luca Bindelli, head of investment strategy at
Lombard Odier, said.
"If we were to reach a deal, some of these concerns building
around Europe would probably unwind," Bindelli said.
"We would not necessarily see the earnings picture improve
materially in the immediate aftermath, but from a sentiment and
multiples perspective, Europe could rebound."
A rise in energy prices has been a key reason European
equities underperformed Wall Street this year, according to
analysts.
The European Central Bank also warned on Wednesday that the war
and lingering trade tensions could hurt euro zone growth, raise
borrowing costs and strain some member states' public finances.
Autos and parts rose 2.5% after data showed Europe's car
registrations rose 7% in April, supported by demand for
electrified vehicles.
Chemicals climbed more than 1.3%, helped by a 19.5% jump
in AkzoNobel after the Dulux paint maker rejected a
joint cash takeover offer of 73 euros ($85) per share from
Nippon Paint ( NPCPF ) and Sherwin-Williams ( SHW ).
Naturgy fell 4% after private equity firm CVC
Capital Partners sold its entire 13.8% stake in the Spanish
energy company at a discount.
Clean energy stocks were also under pressure, with Nordex
down 3%, while Orsted and Vestas
lost 3.1% and 7.4%, respectively.
Polish video game developer CD Projekt ( OTGLF ) dropped 7.5%
after it said it would release a third story expansion for its
flagship game, "The Witcher 3: Wild Hunt," in 2027 rather than
this year as the market had anticipated.
($1 = 0.86 euros)