The Stockholm Stock Exchange recovered from an initial decline on Monday to close in positive territory.

Sentiment was initially weighed down by heightened concerns regarding the Iran conflict following new threats from Donald Trump. Later in the session, reports emerged that the U.S. has proposed temporary exemptions for Iranian oil sanctions, sparking a market rally.

At the close, the blue-chip OMXS30 index was up 0.63 percent at 3,055.52. Shares worth approximately SEK 21.7 billion changed hands on the Stockholm Stock Exchange.

Energy was the top performer among the major industrial sectors, posting a gain of 1.49 percent. At the other end of the spectrum, basic materials lagged, falling 0.32 percent.

Among the leading stocks in the OMXS30 index, Hexagon B rose 4.3 percent, while Nibe B gained 3.0 percent. Boliden saw the weakest performance, dropping 2.0 percent, while Epiroc A declined 1.8 percent.

Sveafastigheter and Klarabo are set to merge, with Sveafastigheter acting as the acquiring entity. Simultaneously, Klarabo is acquiring a residential portfolio from SBB comprising approximately 4,100 apartments. The merged entity is expected to become Nasdaq Stockholm's largest listed residential real estate company, with around 26,500 apartments and a property value of approximately SEK 47 billion.

Klarabo shareholders are offered nine new shares in Sveafastigheter for every 22 shares held in Klarabo. The merger consideration values Klarabo at approximately SEK 2 billion, representing a 0.6 percent premium over the last closing price. Klarabo is also proposing an extraordinary dividend of SEK 1.40 per share.

Klarabo's shares rose 0.9 percent, while Sveafastigheter gained 2.4 percent. SBB B surged 14 percent.

Steelmaker SSAB has decided to invest SEK 3.3 billion in a new quenching line in Oxelösund. The investment will increase capacity for SSAB Special Steels' most profitable products and is expected to yield an attractive financial return. The stock rose 1.1 percent.

Investment firm Bure reported a decrease in net asset value (NAV) for the first quarter compared to the end of the year. Since the end of the reporting period, NAV has increased significantly, supported in part by the share price surge in its holding Silex. The stock fell 2.4 percent.

Housing platform Hemnet dropped 4.2 percent. The company reported net sales of SEK 116.6 million for April, a 21 percent decrease compared to the same month last year. Meanwhile, the average revenue per listing (ARPL) increased by 11 percent.

Pharmaceutical companies AstraZeneca and Daiichi Sankyo have received FDA approval in the U.S. for Enhertu for two new indications in HER2-positive early breast cancer. The approvals cover both neoadjuvant treatment before surgery and adjuvant treatment after surgery, based on the Phase III DESTINY-Breast11 and DESTINY-Breast05 trials. AstraZeneca rose 0.7 percent.

Maha Capital and Blue Water Acquisition Corp. IV have jointly decided to terminate the previously announced process regarding a potential reverse SPAC transaction, thereby cancelling the non-binding letter of intent in its entirety. Maha's shares retreated 1.9 percent.

Technology company Smart Eye swung to an EBITDA profit of SEK 26.9 million in the first quarter, compared to a loss of SEK 17.9 million in the same quarter last year. Revenue also increased. The stock climbed 9.6 percent.

On Sunday evening, a rockfall occurred at Boliden's mine in Kristineberg, Lycksele municipality. A man who was trapped during the incident has now been rescued, according to SVT. Boliden fell 2 percent.

In the analyst flow, Dagens industri issued a 'buy' recommendation for SKF, which faces a group demerger this autumn. The newspaper sees an upside of at least 30 percent. The stock rose 1.9 percent.

Furthermore, Dagens industri issued a 'sell' recommendation for Alleima. The stock fell 5.8 percent.

Citigroup upgraded Saab to 'neutral' from 'sell', with a price target of SEK 527. The stock rose 2 percent.

Ålandsbanken initiated a positive outlook on Beijer Ref. The stock rose 0.8 percent.