Global Market: European shares rise as oil prices ease; Middle East tensions keep investors cautious

European shares edged higher on Friday and were on track to post a weekly gain as oil prices retreated, although investors remained cautious over developments in the Middle East.

The pan-European STOXX 600 rose 0.7% to 640.66 points by 0704 GMT, putting the benchmark on course for its first weekly advance after three consecutive weeks of losses. Most regional markets also traded in positive territory.

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Oil prices retreat amid truce hopes
Oil prices eased after rising for two consecutive sessions as markets assessed the possibility of a truce between the United States and Iran alongside continued tensions in the Middle East.

Investors were weighing the prospects of a US-Iran agreement against Iranian President Masoud Pezeshkian's pledge that the country would not surrender. Concerns were also heightened by the bombing of Saudi Arabia by Houthi rebels.

Reuters reported that the uncertainty surrounding the conflict continued to keep investors focused on potential disruptions to energy supplies and the broader economic impact of higher oil prices.

Airlines gain as fuel costs ease
Energy stocks were among the biggest decliners on Friday, with the sector falling 0.7% as oil prices pulled back.

Airline shares, which are particularly sensitive to fuel costs, benefited from the decline in crude prices. Ryanair and Lufthansa each gained more than 2%.

The travel and leisure sector also advanced, rising 1.2%, as easing oil prices offered some relief to companies exposed to transportation and fuel costs.

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German consumer sentiment weakens

Germany's benchmark DAX rose 0.6% despite a deterioration in consumer sentiment.

A survey showed that German consumer confidence weakened more sharply than expected heading into October, with higher energy prices weighing on households' expectations for their incomes.

Reuters reported that the deterioration in sentiment highlighted the pressure that elevated energy costs continue to place on consumers in Europe's largest economy.

Konecranes shares jump

Among individual stocks, Finland's Konecranes climbed 5.1% after the industrial equipment maker announced a share buyback programme and raised its financial targets.

The gains in Konecranes added to the broader positive tone in European equities, with investors also monitoring corporate developments alongside geopolitical risks and the outlook for interest rates and economic growth.

For the broader European market, easing oil prices provided some support, but uncertainty over the Middle East remained a key factor shaping investor sentiment.

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