European shares inched lower on Thursday as higher oil prices fuelled supply and inflation concerns linked to the Middle East war, while a recovery in global bonds after a U.S. Treasury intervention helped limit losses.
The pan-European STOXX 600 (.STOXX) was down 0.1% at 650.23 points, as of 0848 GMT.
U.S. President Donald Trump warned of economic consequences against any country that provided "any type of lifeline to Iran" as Washington seeks to resolve the conflict with Tehran, which it entered alongside Israel nearly six months ago.
Energy stocks (.SXEP) rose 0.4%, tracking higher oil prices as Brent crude gained about 2% to trade around $93 per barrel.
Travel and leisure stocks (.SXTP) were down 0.6%, as higher oil prices raised concerns over fuel costs.
The U.S. Treasury moved to support the bond market by increasing purchases of long-dated debt after yields climbed to multi-year highs.
Global bond markets came under pressure this week as investors fretted about increasing government debt, while higher oil prices compounded concerns.
"I call it a bond coup because it was such an unexpected move, and it just really changes the structure of the U.S. in terms of maturity and duration," said Ipek Ozkardeskaya, senior analyst at Swissquote.
Ozkardeskay said that the Treasury's move is likely to support European bonds over the longer term, though the market's focus is likely to return to near-term risks once the initial knee-jerk reaction fades.
Germany's DAX (.GDAXI) underperformed regional peers, down 0.5%. The country's borrowing costs climbed to a 15-year high as the country faces increased defence spending needs, mirroring a broader rise in bond yields across major economies.
Among individual stocks, JD Sports (JD.L) was among the worst performers on the STOXX 600, down 13.8%, after the British sportswear retailer cut its profit outlook following a steeper-than-expected drop in second-quarter underlying sales, particularly in North America.
