Key facts
- European shares were subdued as investors assessed U.S.-Iran negotiations.
- The pan-European STOXX 600 index closed 0.2% lower on Friday.
- Mining stocks led losses, declining 2.1%.
- Energy stocks climbed 1.3%.
- The STOXX 600 index achieved a 0.4% weekly gain.
- UK Prime Minister Sir Keir Starmer announced his resignation.
European shares experienced a subdued trading session as investors closely monitored U.S.-Iran negotiations for any signs of progress that could lead to the resumption of shipping through the critical Strait of Hormuz. The pan-European STOXX 600 index closed 0.2% lower on Friday, though it managed to secure a weekly gain of 0.4% amid cautious market sentiment.
Investor sentiment was impacted by the cancellation of planned U.S.-Iran talks in Switzerland due to escalating fighting in Lebanon. However, a subsequent ceasefire agreement between Israel and Hezbollah provided some relief. Mining stocks were the primary drag on the market, declining 2.1% as commodity prices eased. Travel and leisure stocks also fell 0.9% as oil prices saw an uptick, while energy stocks recorded a 1.3% gain.
Despite the weekly gains, the market's recovery was tempered by the fragility of peace negotiations and lingering concerns over inflation and energy costs. Data indicating that German producer prices rose less than expected in May offered some comfort. The European Central Bank's recent interest rate hike was noted, with expectations of a pause at the next meeting. In corporate news, ASML shares fell 1.1% following a report about U.S. concerns regarding advanced tool shipments to China, and hotel group PPHE dropped significantly after takeover talks ended.
European stocks and U.S. futures fell slightly while oil prices dipped after Iranian negotiators said progress had been made in peace talks with the United States. UK assets were steady after Prime Minister Sir Keir Starmer announced his resignation, paving the way for the seventh leader in 10 years.