Global Market: European shares edge lower as Middle East tensions, US-China talks in focus

European shares edged lower on Thursday as investors assessed persistent tensions in the Middle East and looked ahead to closely watched talks between US President Donald Trump and Chinese President Xi Jinping, Reuters reported.

The pan-European STOXX 600 was down 0.4% at 637.56 points by 0710 GMT, with most regional markets also trading in negative territory. According to Reuters, investor sentiment remained cautious as geopolitical uncertainty continued to affect energy markets.

Read more: Global Market Today: Asian stocks waver on inflation, rate concerns


Middle East tensions keep investors cautious

Markets remained focused on developments in the Middle East after Iranian officials held discussions with US envoys at the United Nations General Assembly. Reuters reported that the two sides had signalled limited progress toward resolving the conflict, keeping uncertainty elevated.

Oil prices edged higher as traders reassessed potential supply risks arising from the conflict. Brent crude futures remained above the closely watched $100-a-barrel threshold, supporting energy stocks across Europe.

The European energy sector gained 0.3%, making it one of the few sectors to advance in early trading.

Read more: US market ends down as oil prices, Treasury yields rise

Defence stocks weigh on markets

Aerospace and defence stocks were among the leading sectoral decliners. Shares of Saab and Hensoldt came under pressure, weighing on the broader sector and contributing to the weakness in European equities.

Investors are also monitoring developments in global trade as Trump and Xi prepare for a summit that could provide further direction on US-China economic relations. Reuters reported that markets were looking for signs of progress between the world's two largest economies.

Shelly Group jumps on takeover plan

Among individual stocks, Shelly Group surged 6.2% after Schneider announced plans to launch a €1.2 billion ($1.4 billion) takeover bid for the Bulgarian smart-device maker.

The proposed transaction placed Shelly Group among the standout gainers in European markets, even as the broader STOXX 600 remained under pressure.

H&M shares fall despite profit growth

H&M shares fell 2.5% despite the Swedish fashion retailer reporting a larger-than-expected increase in operating profit for the June-August period.

The decline highlighted the cautious tone across European equity markets, with investors weighing company-specific earnings developments against broader geopolitical and macroeconomic risks.

For now, developments in the Middle East, movements in oil prices and the outcome of the upcoming Trump-Xi meeting are likely to remain key factors shaping investor sentiment across European markets, Reuters said in the report.

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