European shares fell slightly on Friday, on track to snap a four-week winning run, as rising crude prices and renewed geopolitical tensions offset support from a resilient earnings season.
The index has been underpinned by second-quarter profit expectations for Europe's blue-chip companies rising for an eighth straight week. Aggregate STOXX 600 earnings are now forecast to grow 23.4%, led by soaring energy and materials profits.
Still, renewed geopolitical tensions and higher oil prices have tempered risk appetite in Europe, a major net energy importer.
Oil futures climbed 1% to $87.92 a barrel after the U.S. threatened an indefinite naval blockade of Iran.
Talks between Washington and Tehran remained deadlocked, with both sides hardening their rhetoric in recent days.
"The whipsawing of oil is priced in for now," said Angeline Ong, senior technical analyst at IG. "But until we get any confirmation of a tangible deal that allows traffic to flow through Hormuz, we're just going to be trading sideways. It's just going to be choppy."
Energy stocks (.SXEP) rose 0.3%, while mining companies (.SXPP) led sectoral losses, down 1.1% as gold prices slipped, with investors taking profits after bullion surged to a more-than-two-month high on Thursday.
Meanwhile, softer U.S. consumer and producer price data this week reinforced expectations that the Federal Reserve may hold off on further monetary tightening.
Technology shares (.SX8P) added 1.1% after Reuters reported that private equity firm Silver Lake is in talks to acquire Workday (WDAY.O).
The report rekindled investor interest in traditional software names that had fallen out of favour due to concerns that AI could disrupt their business models.
European software companies SAP (SAPG.DE), Nemetschek (NEKG.DE), Temenos (TEMN.S) and Sage (SGE.L) rose between 3% and 8.5%.
Defence stocks (.SXPARO) led sectoral gains, up 1.2%.
Investors also assessed euro zone data showing the economy grew 0.4% in the second quarter from the previous three months, in line with the Reuters poll, while employment rose 0.1%, also matching expectations.
Corporate news was sparse as the earnings season drew to a close.
GB Group (GBGP.L) hits lowest level since 2015, down 27%, after cutting 2027 revenue growth forecast.
