Key Takeaways

• Broad gains: The Stoxx 600 rose 0.5%, Germany’s DAX gained 0.4%, France’s CAC 40 added 0.4%, and the U.K.’s FTSE 100 climbed 0.3%.
• “Good signs”: U.S. Secretary of State Marco Rubio said Iran negotiations are showing positive progress.
• Gaps narrowing: A senior Iranian official told Reuters that differences in talks have shrunk.
• Uranium fault line: A separate Reuters report said Iran’s Supreme Leader issued a directive barring enriched uranium from leaving the country — a major sticking point.
• Hormuz still shuttered: The vital strait carrying a fifth of global oil remains effectively closed.
• Europe’s Hormuz upside: Analysts say European stocks would get a disproportionate boost relative to global peers if the strait reopens.
• Stagflation risk flagged: ING warned of the conflict’s “stagflationary effect” — elevated inflation combined with muted growth.
• ECB rate hike expected: Money markets are pricing in a European Central Bank hike in 2026 to tackle energy-driven inflation.
• Germany shows recovery signs: Consumer sentiment ticked up, while Q1 GDP was confirmed at 0.3% growth.
• Richemont shines: The Swiss luxury goods firm beat fiscal Q4 revenue expectations, lifting shares in early trading.

European stock markets rose on Friday, as investors oscillated between optimism and pessimism around the trajectory of talks to end the Iran war.

By 03:14 ET (07:14 GMT), the pan-European Stoxx 600 had risen 0.5%, Germany’s DAX was higher by 0.4%, France’s CAC 40 was up 0.4%, and the U.K.’s FTSE 100 had gained 0.3%.

“Good Signs” and Narrowing Gaps

U.S. Secretary of State Marco Rubio suggested that discussions between Washington and Tehran have shown “good signs” of progress, while a senior Iranian official quoted by Reuters said that gaps in negotiations have narrowed.

Still, sentiment remains fragile — especially after a separate Reuters report on Thursday said Iran’s Supreme Leader had issued a directive that no enriched uranium should leave the country, presenting a major fault line with demands from President Donald Trump.

Against this backdrop, the Strait of Hormuz — a vital waterway for a fifth of the world’s oil — remains effectively shuttered, maintaining upward pressure on oil prices.

Analysts have argued that should the strait reopen, shares in Europe — which relies on energy products that transit through the conduit — would receive a greater lift than its global peers, according to Reuters.

Stagflation Warnings and ECB Rate Bets

However, as analysts at ING noted, European business activity has flashed warning signals around “the stagflationary effect” of the conflict in Iran — referring to an economic scenario in which inflation is elevated while growth is muted.

Money markets are expecting the European Central Bank to hike interest rates later in 2026, in a bid to keep a lid on an energy-fueled inflation wave.

Germany Flickers; Richemont Shines

Meanwhile, economic data out of Europe was in focus. Consumer sentiment in Germany — the powerhouse of the Eurozone — displayed potential early indications of recovery, while the broader economy was confirmed to have expanded by 0.3% in the first quarter of this year.

In individual stocks, Swiss luxury goods firm Richemont notched higher-than-anticipated fiscal fourth-quarter revenue, sending shares higher in early trading.