European shares hit two-week high on US-Iran talk optimism

European shares climbed to a more than two-week high on Friday, supported by gains in technology stocks as investors reacted positively to signs of progress in US-Iran peace talks, despite ongoing disagreements between the two sides.

The pan-European STOXX 600 index rose 0.6 percent to 624.50 points by 0801 GMT and was on track to finish the week with solid gains, News.Az reports, citing Reuters.

Negotiations between Tehran and Washington continue to face key sticking points, including Iran’s uranium stockpile and control over the Strait of Hormuz.

US Secretary of State Marco Rubio said there were “some good signs” in the discussions, while a senior Iranian source told Reuters that the gap between the two sides had narrowed.

Analysts say that any potential agreement, particularly involving the opening of the Strait of Hormuz, could support European equities, which have underperformed global peers due to the region’s reliance on energy imports and the impact of higher energy costs on inflation.

“We are neutral on Europe and eurozone equities, given their sensitivity to higher energy costs, while we view the more defensive Swiss market and European healthcare more favourably,” said Mark Haefele, chief investment officer at UBS Global Wealth Management.

AI-driven optimism, which has pushed global markets to record highs, also boosted European technology stocks, with the sector rising nearly 2 percent. Strong earnings expectations from US chipmaker Nvidia further supported sentiment.

Semiconductor-related stocks, including Infineon Technologies, STMicroelectronics, ASM International, and ASML, gained between 2.5 percent and 3.7 percent.

Luxury stocks also performed well, with Cartier owner Richemont rising 1.2 percent after reporting stronger-than-expected fourth-quarter revenue. The broader luxury index added 0.5 percent.

Sportswear companies Adidas and Puma rose 2.1 percent and 3.3 percent respectively, following an upbeat forecast from US peer Deckers Outdoor.

German logistics group DHL advanced 3.7 percent after Deutsche Bank upgraded its rating to “buy” from “hold.”

However, some stocks moved lower. Puig shares fell nearly 15 percent after the Spanish fragrance company ended merger talks with US cosmetics giant Estée Lauder.

Swiss bank Julius Baer dropped 9 percent after reporting weaker-than-expected net new money inflows.

Economic data showed German consumer sentiment improving ahead of June, alongside confirmation that Germany’s economy grew 0.3 percent in the first quarter of 2026. The DAX index rose 0.5 percent.

In the UK, retail sales fell at the sharpest pace in nearly a year in April, as consumer spending weakened amid the Iran conflict and rising energy costs. Despite this, the FTSE 100 gained 0.3 percent.

European Commission Vice President Valdis Dombrovskis became the latest official to warn that the European Central Bank may need to respond to rising inflation.

Money markets are currently pricing in at least two ECB interest rate hikes before the end of the year.

News.Az 

By Nijat Babayev