European shares were steady on Thursday after a sharp rally in the previous session, as investors assessed the prospects of a U.S.-Iran peace deal and digested a slew of corporate earnings.
The pan-European STOXX 600 (.STOXX) was little changed at 623.59 points, as of 0810 GMT. Most major regional bourses traded higher, with France's CAC 40 (.FHCI) up 0.3%, while London's FTSE 100 (.FTSE) fell 0.5%.
The European benchmark's rally on Wednesday left it about 2% below levels seen before the start of the Middle East war. Energy-dependent European markets have lagged global peers since the conflict began, while AI-driven optimism has boosted other major indexes to record highs.
U.S. President Donald Trump predicted a swift end to the war as Tehran considered a U.S. peace proposal that is expected to end the conflict while leaving Iran's nuclear programme and the reopening of the Strait of Hormuz unresolved.
"Regardless of the back and forth, it's the closest that the U.S. and Iran have been to potentially getting a peace deal and that's what's driving the positive momentum in markets this morning," said Daniela Hathorn, senior market analyst at Capital.com.
"There's been hardly any instances where the U.S. stock market has been trading with a bearish bias, whereas for Europe throughout the second half of (April), it's been a continuous bearish bias on the back of worsening talks."
Oil major Shell (SHEL.L) dipped 3.9% after it reported first-quarter profit that beat expectations, but reduced the pace of its quarterly share buyback programme. Peer BP (BP.L) was down 1.8%, while the energy index (.SXEP) fell 1.2%.
Luxury shares (.STXLUXP) gained 2.5% after being under pressure this year. LVMH (LVMH.PA), Hermes (HRMS.PA) and Kering (PRTP.PA) were up between 2.5% and 2.9%.
Spirits group Campari (CPRI.MI) tumbled 11% after the Italian firm's first-quarter revenue was below expectations. Peers Diageo (DGE.L) and Pernod Ricard (PERP.PA) lost over 1%, while the beverages index (.SX3P) dropped 1.1%.
Euro zone financial integration has made steady progress in the past few years but the region's equity markets remain fragmented, the European Central Bank said in a report.
Among other movers, Rheinmetall (RHMG.DE) shares dropped 3.1%. The German defence firm reported first-quarter results and said it had submitted a bid to buy German Naval Yards Kiel.
Persil maker Henkel (HNKG.DE) jumped 4% after the German firm met sales expectations for the first quarter.
Shares of Siemens Healthineers (SHLG.DE) tumbled 3.7% after the medical-tech company cut its full-year outlook due to structural changes in the Chinese market and pronounced inflation expectations.
