FRANKFURT: European shares closed lower on Thursday as oil prices resumed their rise on faltering hopes of US-Iran negotiations, keeping euro zone bond yields near multi-year highs and denting risk appetite.
The pan-European STOXX 600 ended 0.6 percent lower. Most regional bourses were also in negative territory.
Iranian officials communicated with US envoys on the sidelines of the UN General Assembly, but both sides signalled little progress toward ending the conflict.
“I wouldn’t hold my breath for any quick resolution to the Middle East standoff. Both parties are quite intransigent, and their differences are irreconcilable,” said Yasser El-Shimy, senior investment analyst at the Motley Fool.
Oil prices rose for a second day after falling for five sessions, with Brent crude holding above the key USD100-per-barrel level.
European energy shares were the top gainers, up 1.1 percent. Consumer-facing food and beverages and personal and household goods saw modest gains of 0.7 percent and 0.2 percent, respectively.
Healthcare stocks, considered traditionally defensive, were down slightly relative to peers.
Germany’s 10-year government bond yield, the benchmark for the euro zone, was steady at 3.611 percent, just below a 17-year high reached last week as elevated oil prices strengthened the case for further monetary tightening from the European Central Bank.
ECB board member Isabel Schnabel resigned to take on a senior role at the International Monetary Fund, kicking off a reshuffle at the central bank.
Investors are hoping for some progress from a Washington summit between US President Donald Trump and Chinese President Xi Jinping. US Treasury Secretary Scott Bessent said the two countries had agreed to extend their trade truce to January 10.
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