Europe Opens Flat as Middle East Tensions and Oil Rebound Keep Markets on Edge

European stocks started Thursday on a cautious note, with major indices showing mixed performance as investors weighed renewed geopolitical risks and a rebound in oil prices following the previous session’s rally.

The pan-European Stoxx 600 slipped 0.2%, while Germany’s DAX and France’s CAC 40 both edged lower by 0.2% and 0.3%, respectively. In contrast, the UK’s FTSE 100 managed to outperform, rising 0.2% in early trading.

Trump’s Warning Clouds Ceasefire Outlook

Investor sentiment weakened after U.S. President Donald Trump signaled that American military forces would remain positioned around Iran until a “real agreement” is fully implemented. He also warned of further escalation if the terms are not honored.

The remarks added to growing uncertainty around the fragile ceasefire between the U.S. and Iran. Tehran has already expressed skepticism about upcoming negotiations, describing them as potentially “unreasonable,” even as it prepares to participate in talks in Pakistan.

At the same time, continued Israeli airstrikes on Lebanon—including attacks on residential areas—have raised serious concerns about the durability of the truce and the risk of a wider regional conflict.

Oil Rebounds as Supply Risks Persist

Oil prices moved higher after steep losses in the previous session, supported by ongoing disruptions in the Strait of Hormuz.

Brent crude hovered near $97 per barrel, while U.S. West Texas Intermediate traded at similar levels. Despite the ceasefire, shipping activity through the critical waterway remains tightly restricted, with Iran maintaining significant control over transit flows.

Gold Edges Lower on Inflation Concerns

Gold prices slipped slightly, with spot prices holding steady and U.S. futures declining around 0.6%.

The metal had seen modest gains previously on safe-haven demand, but a stronger U.S. dollar and rising bond yields limited further upside. Meanwhile, the rebound in oil prices fueled fresh inflation concerns, reducing the appeal of non-yielding assets like gold.