European stock markets experienced significant volatility on Thursday before closing higher. Traders assessed the evolving narrative around artificial intelligence and diplomatic efforts concerning the reopening of the Strait of Hormuz. The Europe STOXX 600 index ended the session with a slight gain. Mining stocks, which had underperformed this week, led the advance, while defensive sectors such as utilities, healthcare, and consumer staples also strengthened. As oil prices surpassed $108 per barrel, European bond yields rose, with travel and banking stocks among the weakest performers. In an interview in Paris on Wednesday, Iran's Ambassador to France, Mohammad Amin-Nejad, stated that Iran is in discussions with Oman to establish a permanent tolling system to formally assert control over maritime traffic through the Strait of Hormuz. Reports indicate that senior officials in Tehran believe that shipping uranium abroad could make Iran more vulnerable to potential attacks from the United States and Israel in the future. QinetiQ Group Plc was the top gainer on the benchmark index, rising 7.9%, driven by robust UK defense spending which pushed the company's order book to a record high. Investec Plc shares advanced 4.8% after the bank reported net profit that exceeded analyst expectations. European equities have risen this week, supported by expectations of a potential breakthrough in Middle East tensions. Strong performance from Asian technology stocks has also bolstered overall market optimism. However, since the outbreak of the Iran conflict, European markets have lagged behind their U.S. and Asian counterparts. This underperformance is attributed to a relative lack of AI-related stocks in Europe, higher dependence on energy imports, and increasingly firm expectations for interest rate hikes. The latest Bank of America survey of European fund managers shows that a net 32% of investors anticipate a slowdown in regional growth in the coming months. In other individual stock movements, IG Group Holdings Plc reached a record high after UBS raised its price target for the online trading platform to the highest among brokers tracked by Bloomberg.
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