European equity markets moved decisively higher on Friday after U.S. President Donald Trump stated that a “great settlement” had been reached to end the conflict involving Iran, adding that a formal signing ceremony could take place in Europe as soon as this weekend.
Iranian officials, however, maintained a more cautious stance, saying that no final agreement had yet been approved and that key issues, including frozen assets and security arrangements in the Strait of Hormuz, remained under discussion.
German Inflation Eases in Line With Expectations
On the economic front, final figures from Germany’s statistics office Destatis showed inflation slowed in May, primarily due to a moderation in energy price increases.
Consumer price inflation was confirmed at 2.6% year-on-year, down from 2.9% in April, which had marked the highest reading since December 2023.
The harmonised measure used across the European Union also eased to 2.7%, matching preliminary estimates and falling from 2.9% in the previous month.
French Inflation Reaches Highest Level Since Early 2024
In France, data from statistics agency INSEE showed consumer prices increased by 2.8% year-on-year in May.
The reading represented the fastest pace of inflation since February 2024 and highlighted continuing price pressures within the French economy.
UK Economy Contracts in April
In the United Kingdom, official figures showed economic activity weakened in April as the services sector lost momentum.
According to the Office for National Statistics, real GDP declined by 0.1% during the month, reversing the 0.3% growth recorded in March.
The decline was the first monthly contraction since August 2025 and matched economists’ expectations.
Separate trade data showed the UK’s visible trade deficit narrowed to £26.05 billion in April from £27.22 billion in March, as exports increased while imports declined.
Major European Indices Post Strong Gains
Investor sentiment improved across regional markets, lifting the main European benchmarks.
France’s CAC 40 advanced 1.6%, Germany’s DAX climbed 1.3%, and the UK’s FTSE 100 gained 1%.
Banking Stocks Lead the Rally
Financial stocks were among the strongest performers during the session.
Shares of Commerzbank (TG:CBK), Deutsche Bank (TG:DBK), BNP Paribas (EU:BNP) and Barclays (LSE:BARC) all moved between 4% and 5% higher as investors rotated into the sector.
Travel Stocks Benefit From Falling Oil Prices
Travel and leisure companies also attracted buying interest as lower crude prices improved the outlook for operating costs.
easyJet (LSE:EZJ), Lufthansa (TG:LHA) and Air France (EU:AF) posted gains ranging from 3% to 8%.
Kier Rallies on Contract Extension
Among individual movers, infrastructure, construction and property group Kier (LSE:KIE) advanced sharply after securing a contract extension valued at approximately £140 million from South West Water.
The agreement provided a boost to investor confidence in the company’s future revenue visibility.
McBride Falls After Profit Warning
In contrast, shares of McBride (LSE:MCB) came under significant pressure in London.
The manufacturer of private-label cleaning products issued a profit warning, citing rising raw material and energy costs as key factors weighing on earnings expectations.
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