European equities traded slightly higher on Thursday as investors evaluated the potential impact of a renewed ceasefire agreement between Israel and Lebanon on wider efforts to resolve the conflict involving Iran.
By 07:13 GMT, the pan-European Stoxx 600 index was up 0.1%. Germany’s DAX gained 0.2%, France’s CAC 40 advanced 0.3%, while London’s FTSE 100 was little changed.
Market sentiment received support after Israel and Lebanon agreed to reinstate a fragile ceasefire, raising hopes that diplomatic progress could eventually lead to a broader agreement between Washington and Tehran. Any potential U.S.-Iran deal has been closely linked to stability in Lebanon, where Israeli forces backed by the United States have been engaged in hostilities with Hezbollah, the Iran-supported militant group.
Following a fourth round of negotiations mediated by the United States, both Israel and Lebanon stated that the renewed truce would be “contingent on a complete cessation of Hezbollah fire and the evacuation of all Hezbollah operatives” from areas south of the Litani River.
“These steps will enable progress towards a comprehensive peace and security agreement,” a joint statement said.
Hezbollah was not directly involved in the latest round of talks.
Energy markets reacted positively to the developments. Brent crude, the international oil benchmark, fell 1.0% to $96.84 per barrel following the announcement. Government bond yields across the euro area also moved lower, reflecting expectations that a future agreement between the U.S. and Iran could lead to the reopening of the Strait of Hormuz, easing concerns over energy supplies and inflationary pressures.
Investors continue to monitor the implications for monetary policy, with markets still anticipating that the European Central Bank may need to raise interest rates later this year to contain inflation across the eurozone.
On Wednesday, U.S. President Donald Trump indicated that negotiations with Iran could deliver results as early as this weekend. Meanwhile, Iran’s foreign minister confirmed that communication channels with Washington remain open, despite earlier reports suggesting Tehran had suspended indirect contacts through intermediaries.
Political pressure is also building in the United States. The House of Representatives approved a resolution seeking to prevent Trump from continuing military operations without further authorisation. While the measure still faces significant hurdles, including Senate approval and the possibility of a presidential veto, it highlights growing domestic debate over the conflict.
AI Growth Story Remains in Focus
Outside geopolitics, artificial intelligence continued to dominate market discussions.
Taiwan Semiconductor Manufacturing Company’s (NYSE:TSM) chief executive said demand for advanced computing infrastructure and next-generation semiconductors is expected to remain exceptionally strong, providing a significant driver of growth over the coming years.
Despite those optimistic comments, European semiconductor stocks struggled in early trading. STMicroelectronics (BIT:STMMI) and ASML (EU:ASML) both edged lower after U.S. chipmaker Broadcom (NASDAQ:AVGO) released quarterly results.
Although Broadcom reported strong revenue growth supported by surging demand for AI-related chips, its shares fell in after-hours trading as some investors were disappointed by the company’s outlook.
Remy Cointreau Jumps on New Turnaround Strategy
Among individual movers, shares in Remy Cointreau (EU:RCO) rose sharply in Paris after management unveiled plans to increase operating profit by around €100 million by the 2028/29 financial year.
The spirits group is also targeting a doubling of sales generated through travel retail channels and emerging markets as part of a broad three-year transformation programme aimed at improving growth and profitability.
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