European stock markets closed lower as investors closely monitored developments regarding potential peace negotiations between the United States and Iran, against the backdrop of ongoing tensions in the Strait of Hormuz. The Europe-wide Stoxx Europe 600 index ended the session down 0.6%. Technology and energy stocks outperformed, while healthcare, automotive, and mining sectors lagged the most.
The European benchmark index pared an intraday loss of as much as 1% after Pakistani officials announced that Iranian Foreign Minister Abbas Araghchi was expected to arrive in Islamabad Friday evening, potentially for a second round of peace talks with the United States. Following the news, Brent crude oil fell from $107 to $104 per barrel. However, Iran’s semi-official Tasnim News Agency reported that no meeting with U.S. officials was scheduled during Araghchi’s visit.
The prolonged stalemate in Middle Eastern conflicts has weighed heavily on European equities, erasing their earlier outperformance compared to U.S. stocks this year. Investors remain concerned that elevated oil prices could hamper economic growth. Year-to-date gains for the Stoxx Europe 600 have narrowed to 3.1%, trailing the S&P 500’s 4.6% advance. The U.S. market has also been supported by strong earnings momentum in artificial intelligence-driven technology stocks.
In European corporate earnings, Germany’s SAP rose 4.7%, boosting the region’s technology sector. The software company reassured investors by reporting growth in cloud order backlogs, easing concerns about disruption from artificial intelligence. Siemens Energy, viewed as a key beneficiary of rising demand for energy infrastructure and AI data centers, gained 2.6% after reporting its first-quarter results.
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