European stock markets were flat on Thursday following gains in the previous session, with bonds weakening and oil prices holding above $100 per barrel, as investors closely monitored progress in US-Iran peace talks.
Iran stated it is evaluating the latest US response aimed at ending the conflict, while US President Donald Trump expressed willingness to wait for a "satisfactory answer" from Tehran but warned of resuming strikes if no agreement is reached.
As of 08:06 GMT, the pan-European STOXX 600 index was unchanged at 620.28 points. The index had risen 1.5% on Wednesday, closing near a two-week high.
European national markets showed mixed performance, with Germany's DAX index and France's CAC 40 both flat.
Preliminary data indicated France's private sector contracted in May at the fastest pace in over five years, while another survey showed Germany's private sector shrank for the second consecutive month.
Global equities broadly rebounded, but European markets, reliant on oil imports and with limited exposure to artificial intelligence technology, failed to recover to pre-conflict levels.
A senior market analyst noted, "Despite yesterday's drop in oil prices and today's increased optimism around AI, geopolitical uncertainty continues to deter investors from fully committing."
"The main narrative in European markets isn't solely driven by AI optimism. Investors remain cautious, focusing more on bond yields and financing costs."
Sources indicated that a European Central Bank rate hike in June is almost certain, though the bank may adopt a vague stance on subsequent actions.
Current money market pricing suggests the ECB will implement more than two rate hikes by year-end.
The banking sector weighed on the broader market, declining 0.4%, while oil and mining sectors also fell.
EasyJet reported a first-half loss in line with expectations, though full-year prospects remain uncertain due to the Iran conflict. Shares of the UK budget airline rose 0.5%.
Italian insurance giant Generali posted first-quarter results that exceeded expectations and reaffirmed its 2027 targets, with its stock gaining 2.1%.
UK defense group QinetiQ announced a £200 million (approximately $268.34 million) share buyback program and forecast 3%-5% revenue growth by 2027, sending its shares soaring 6.3%.
UK automotive marketplace AutoTrader saw its stock drop nearly 4% after reporting a decline in April customer numbers and flat revenue.
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