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Markets Score 25 Neutral

European Stocks Recover from Morning Slump, End on Mixed Note Amid Geopolitical Tensions

Apr 02, 2026 17:42 UTC
^STOXX, ^FTSE, ^GDAXI
Immediate term

European equities pared losses in late trading on Thursday but closed with a mixed performance, reflecting ongoing concerns over Middle East tensions and their potential economic impact.

  • European stocks recovered from morning losses but closed mixed on Thursday, with the Stoxx 600 down 0.18%.
  • U.S. President Donald Trump's comments on potential military action against Iran fueled early market weakness.
  • A proposed Iran-Oman transit monitoring deal eased some concerns, supporting a late-day rebound.
  • The U.K.’s FTSE 100 rose 0.69%, while Germany’s DAX and France’s CAC 40 fell by 0.56% and 0.24%, respectively.
  • France’s state budget deficit narrowed to EUR 32.1 billion in January-February 2026, down from EUR 40.3 billion a year earlier.
  • Energy stocks in the U.K. and pharmaceutical gains in France were notable bright spots amid the mixed session.

European stocks initially struggled on Thursday amid renewed fears of escalating conflict in the Middle East following U.S. President Donald Trump’s remarks. However, markets staged a late recovery, with some indices managing to close above the flat line. The pan-European Stoxx 600 ended down 0.18%, while Germany’s DAX and France’s CAC 40 closed lower by 0.56% and 0.24%, respectively. The U.K.’s FTSE 100 bucked the trend, rising 0.69%. The day’s volatility was driven by Trump’s assertion that the U.S. would take 'extremely hard' action against Iran, raising concerns about inflation and economic slowdown. A potential agreement between Iran and Oman to monitor transit through the Strait of Hormuz helped ease some of the market’s fears. Energy stocks in the U.K. saw gains, with Shell and BP rising 2.9% and 2.7%, respectively. AstraZeneca also climbed nearly 2% after positive trial results for its liver cancer treatment. In Germany, Deutsche Telekom fell by about 3.3%, while E.ON and Deutsche Boerse saw gains. French markets showed a mixed picture, with Stellantis rising nearly 4% and TotalEnergies gaining 2.4%. Meanwhile, France’s state budget deficit narrowed to EUR 32.1 billion in January-February 2026 from EUR 40.3 billion in the same period last year, signaling improved fiscal management. The uneven performance across European markets highlights the sectoral and regional disparities in response to geopolitical and economic developments.

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