European stock markets traded mostly higher on Thursday as investors reacted positively to reports that the United States and Iran are preparing to restart negotiations aimed at ending their ongoing conflict. Optimism surrounding a potential peace agreement lifted investor confidence across several major European indexes and eased concerns over global oil supply disruptions.
The pan-European Stoxx 600 index climbed 0.1% in early trading, while Germany’s DAX rose 0.1% and France’s CAC 40 advanced 0.4%. The U.K.’s FTSE 100 underperformed, slipping 0.3% amid weakness in energy stocks.
According to reports from The Wall Street Journal, Washington and Tehran are working with international mediators on a preliminary framework that could relaunch formal peace talks next week in Pakistan. Negotiations are expected to focus on Iran’s nuclear program, sanctions relief, and international inspections. While significant disagreements remain, markets welcomed signs of diplomatic progress.
Investor sentiment improved further after U.S. President Donald Trump stated that the military operation against Iran could end if Tehran accepts previously discussed conditions. U.S. stock markets rallied strongly on Wednesday as traders anticipated a possible de-escalation of tensions in the Middle East.
Oil prices moved sharply lower following the reports, as traders speculated that tanker traffic through the Strait of Hormuz could soon normalize. The critical shipping route handles nearly 20% of global crude oil shipments and has faced severe disruptions during the conflict. Brent crude futures fell 3.7% to $97.92 per barrel.
Corporate earnings also influenced European trading activity. Shell shares declined despite the company reporting stronger-than-expected quarterly profits, as investors reacted negatively to reduced share buyback plans. Meanwhile, semiconductor-related stocks gained momentum after Arm Holdings issued an upbeat revenue forecast, highlighting continued strong demand driven by the artificial intelligence boom.


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