European stock markets closed lower as tensions in the Middle East escalated following a conflict between the United States and Iran near the Strait of Hormuz, dampening hopes for a swift resolution. The Stoxx Europe 600 index fell 0.7% at the close. Telecommunications and technology stocks outperformed, while insurance and industrial sectors led the declines. Shares of German ammunition and tank manufacturer Rheinmetall dropped 9.2% after analysts at JPMorgan downgraded its rating and price target. Swiss Life Holding weighed on the insurance sector following a rating downgrade. European equities maintained their losses after the release of U.S. economic data. U.S. employers added jobs for a second consecutive month in April, marking the first time in nearly a year for back-to-back monthly gains, while the unemployment rate remained unchanged. Supported by corporate earnings that generally exceeded market expectations, the European benchmark index managed a second consecutive week of gains. However, since the conflict began, European stocks have underperformed compared to U.S. and emerging market equities due to heightened concerns over the more significant impact of rising energy prices on regional economic growth.
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