The pan-European Stoxx 600 index ended flat at 616.95 points

European shares were little changed on Thursday as markets weighed progress toward a potential resolution to the Middle East war, while investors assessed a new batch of corporate earnings.

The pan-European Stoxx 600 index ended flat at 616.95 points. Regional bourses were mixed, with Germany’s DAX and London’s FTSE 100 rising around 0.3 per cent each.

The German government halved its 2026 growth forecast and cut its 2027 growth prediction, while raising inflation projections amid soaring oil prices.

Optimism grew that the Iran war could be close to ending, although Teheran warned that the fate of its nuclear programme remained unresolved.

The Stoxx 600 was close to recouping all the losses it has incurred since the war. Still, concerns have lingered over how sustained increases in oil prices could weigh on economies of European countries, which rely heavily on imported energy.

For Europe, the stock market is not necessarily a reflection of the broader economy which is much more influenced by industries that tend to be negatively affected by rising energy prices, said Stephan Kemper, BNP Paribas Wealth Management’s chief investment strategist.

The longer it takes, the more the market will realise that we are way beyond the point where we just have to think about whether the Strait (of Hormuz) is open or not, but how much is the damage that already has been done and to what extent will this derail the policy growth scenario that the market is to play, Kemper said.

With the European corporate earnings season in full swing, investors looked for crucial insights into the impact of the ongoing geopolitical uncertainties.

Among sectors, technology and energy boosted the index, gaining 1.5 per cent and 0.7 per cent, respectively.

Software companies rose with Germany’s SAP gaining 3.5 per cent, while Dassault Systemes and Capgemini were up over 2.5 per cent.

On the downside, financial shares weighed heavily on the benchmark index, declining 1 per cent. Defence stocks slipped 1.8 per cent with Safran and Rolls-Royce dropping 3.4 per cent and 2.4 per cent, respectively.

The travel and leisure sector was also under pressure with Ryanair declining 6.4 per cent. Germany’s Lufthansa became the first major carrier to ground planes due to high jet fuel costs, while Britain’s easyJet said its bookings were lagging last year’s. Both were down 3.4 per cent and 5 per cent, respectively.