European shares inch higher on Middle East peace prospects; earnings in focus

European shares edged higher on Thursday as growing optimism about a potential resolution to the Middle East conflict lifted market sentiment, while investors assessed corporate earnings reports across the region.

The pan-European STOXX 600 index was up 0.1% to 618.05 points as of 0848 GMT.

Major regional markets also rose, with France’s CAC and London’s FTSE 100 adding 0.1% and 0.4%, respectively.

Hopes for peace in the Middle East gained momentum after US President Donald Trump said talks between Israel and Lebanon would take place on Thursday.

The STOXX 600 is very close to recouping all the losses it incurred since the outbreak of the conflict on the back of improving investor sentiment.

However, concerns over how rising oil prices might affect European economies, which heavily rely on energy imports, have caused European equities to underperform their Wall Street counterparts.

“Investors were very keen on European stocks toward the end of 2025 because of their combination of lower valuation and still decent fundamentals,” said IG’s chief markets analyst, Chris Beauchamp.

“But the exposure to rising energy costs that will hit Europe particularly hard means that those things are now mostly outweighed by the worries about the outlook for energy prices and economic growth.”

Meanwhile, the European corporate earnings season was in full swing, providing investors with crucial insights into company performance amid ongoing geopolitical uncertainties.

Among sectors, technology led the gainers, rising 1.3%, while retail stocks also performed strongly, climbing more than 1%.

Basic resources advanced 0.8%, benefiting from rising gold prices.

On the downside, telecommunications stocks led the declines, falling 1%, with Deutsche Telekom shares dropping 1.7% and weighing heavily on the benchmark index.

The banking sector also faced pressure, declining 0.2%, while the energy sector slipped 0.4% despite oil prices stabilizing after earlier losses.

In individual stock movements, Barry Callebaut plunged 16% after the Swiss chocolate manufacturer lowered its full-year operating profit outlook.

UK-based budget airline EasyJet shares fell 3.7%, after it warned of a bigger first-half loss and said bookings were lagging year-ago levels as a result of uncertainty sparked by the Iran war.

Meanwhile, betting group Entain gained 6.5% after its first-quarter net gaming revenue rose 3%.