European stock markets edged higher on Thursday (14 May) as technology shares boosted sentiment, although investors remained cautious over stalled U.S.-Iran talks and a closely watched summit between Washington and Beijing.
The pan-European STOXX 600 index rose 0.4 per cent to 613.98 points by mid-morning trading, building on Wednesday’s 0.8 per cent gain. Germany’s DAX climbed 1.2 per cent, while Britain’s FTSE 100 was broadly flat despite stronger-than-expected economic data showing the UK economy expanded by 0.3 per cent in March.
Trading activity remained subdued, with several European markets closed for public holidays.
Markets are balancing optimism around artificial intelligence with fears of wider instability in the Middle East. U.S. President Donald Trump is expected to press China to help end the Iran conflict after negotiations between Tehran and Washington stalled.
“We await the developments in China. But really the focus is on AI,” said Frédérique Carrier, head of investment strategy at RBC Wealth Management. “All eyes are on the Middle East crisis for that to really be resolved.”
Technology stocks were among the strongest performers. Europe’s technology index gained 1 per cent, helped by semiconductor companies including STMicroelectronics, ASM International, BE Semiconductor Industries and Infineon Technologies, which rose between 1.4 per cent and 2.8 per cent.
The rally reflects growing confidence that companies linked to AI and data centres will continue to benefit from heavy investment. However, European shares remain below the levels seen before the outbreak of the Iran conflict, while U.S. markets have already returned to record highs.
Carrier said Europe’s earnings season had been solid, particularly for banks and industrial firms linked to electrification and data centres, although it “pales in comparison” with the stronger performance seen in the United States.
Among individual companies, Burberry fell 4.7 per cent after reporting fourth-quarter sales in line with expectations. Watches of Switzerland jumped 14 per cent after forecasting full-year operating profit above market expectations.
Investment group 3i Group dropped almost 16 per cent following its results, dragging the financial services sector down 0.8 per cent.
Meanwhile, Legal & General rose 5.2 per cent after the Financial Times reported that the company was not considering a sale.
Investors are also reassessing the outlook for interest rates after European Central Bank chief economist Philip Lane signalled that further rate rises may be needed to tackle inflation.
Money markets are now pricing in more than two ECB rate increases this year, with the first expected in June.
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Israel's defence minister said on Wednesday Israeli troops will not withdraw from southern Lebanon, highlighting a hurdle to Iran-U.S. peace talks, as the top U.S. diplomat tours the Middle East to win over allies sceptical about a proposed deal.
China’s anti-corruption authorities have launched an investigation into Bian Zhigang, a senior defence and space official, over suspected serious violations of discipline and law, officials said on Wednesday.
Israel and Lebanon are discussing a U.S.-backed proposal that would see Israeli forces withdraw from parts of southern Lebanon and transfer control of those areas to the Lebanese army, according to officials from both sides.
The head of the United Nations nuclear watchdog has said inspections in Iran will resume in the near future following an interim peace agreement between Tehran and Washington. However, Iranian officials insist access to key facilities remains contingent on a final deal and the lifting of sanctions.
Tehran has agreed to let the International Atomic Energy Agency (IAEA) recommence inspections of its nuclear programme, U.S. Vice President JD Vance has said. The U.S. and Iran have settled on a 60-day roadmap aimed at reaching a final deal, according to mediators Qatar and Pakistan.
A Ukrainian strike has damaged a school building in a Russian-controlled area of Ukraine’s Zaporizhzhia region, according to local authorities cited by the TASS news agency. No injuries were reported in the incident.
Israel's defence minister said on Wednesday Israeli troops will not withdraw from southern Lebanon, highlighting a hurdle to Iran-U.S. peace talks, as the top U.S. diplomat tours the Middle East to win over allies sceptical about a proposed deal.
U.S. President Donald Trump said that Iran had agreed to nuclear inspections into "infinity, despite Tehran's denials, and that unfrozen Iranian assets would be used to buy humanitarian supplies from the United States.
Authorities in France are reporting that about 20 people have died over the weekend while swimming in unsupervised areas of rivers, lakes and coastal waters as they tried to escape the heatwave.
The European Union and Taliban officials held talks in Brussels on Tuesday on consular services and the situation of Afghans whose asylum applications have been rejected in Europe.
China’s anti-corruption authorities have launched an investigation into Bian Zhigang, a senior defence and space official, over suspected serious violations of discipline and law, officials said on Wednesday.
Alibaba, one of the world's largest technology and e-commerce companies, has sued the U.S. Pentagon after being added to a blacklist of firms it claims support China's military, escalating a dispute with potentially significant consequences for the company.
The head of the United Nations nuclear watchdog has said inspections in Iran will resume in the near future following an interim peace agreement between Tehran and Washington. However, Iranian officials insist access to key facilities remains contingent on a final deal and the lifting of sanctions.
Pakistan and Russia have agreed to deepen counterterrorism cooperation amid continuing concerns over militant threats emanating from Afghanistan, underlining growing alignment between the two countries on regional security.
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