European shares rise as oil slips, investors watch Middle East

Published Fri, Jun 5, 2026 · 05:39 AM

[BENGALURU] European shares rose on Thursday (Jun 4) as oil prices eased, although investors remained cautious on whether the latest developments in the Middle East would lead to a durable peace deal. Brent crude futures fell 2.8 per cent to US$95.06 a barrel after Israel and Lebanon agreed on Wednesday to implement a ceasefire.

However, hopes for a broader de-escalation were tempered after Hizbollah rejected the deal and Israel said that it would not withdraw troops from Lebanon, complicating US President Donald Trump’s efforts to forge a peace deal with Iran.

Investors were looking for firmer evidence that a breakthrough was possible after several failed rounds of talks. The pan-European Stoxx 600 finished 0.5 per cent higher at 624.45 points, led by gains in healthcare with French biotech Abivax jumping 17.8 per cent and rebounding from losses earlier in the week.

The Stoxx 600 remained on track for a marginal weekly decline, with the Strait of Hormuz, a key global oil-shipping route, still mostly shut.

Persistent price pressures have led markets to price in a 25-basis-point rate hike by the European Central Bank at next week’s meeting, according to LSEG data.

“The well telegraphed policy hike coming next week reveals a preference for curbing upside inflationary risks rather than addressing downside growth risks,” said a group of macro analysts led by Rune Thyge Johansen at Danske Bank.

“We expect (Christine) Lagarde to keep full optionality on the future policy rate path, including a potential second summer hike,” Danske Bank’s analysts added. Chip stocks eased, with Infineon Technologies and STMicroelectronics down 3.4 per cent and 2.6 per cent, respectively, after US chipmaker Broadcom reported lower-than-expected second-quarter revenue.

“Europe’s lack of heavy exposure to technology has hurt it in the past, but today it is helping, because investors are rotating away from tech and towards defensive, value-oriented parts of the market,” said Steve Sosnick, chief market analyst at Interactive Brokers. Software and IT stocks extended a recovery from a sharp sell-off over AI disruption concerns. Capgemini, Nemetschek, Dassault Systemes, SAP and Sopra Steria rose between 6.39 per cent and 8.79 per cent.

Shares of British financial firms with exposure to China fell after Chinese media reported mainland residents were facing tighter restrictions on opening offshore accounts at major Hong Kong banks. HSBC, Standard Chartered and Prudential declined between 1.8 per cent and 7.6 per cent. Among individual movers, Remy Cointreau rose 9.8 per cent after its CEO Franck Marilly laid out a three-year turnaround plan and said that the drinks group aimed to boost operating profit by around 100 million euros (S$149 million).

Puma shares gained 4.5 per cent after Citigroup raised its rating to “buy” from “neutral”. REUTERS