(Sharecast News) - European shares managed to finish slightly higher on Friday as geopolitical concerns and jitters around artificial intelligence valuations continued to weigh on sentiment.
The pan-European Stoxx 600 edged up 0.04% to 641.14.
Germany's DAX slipped 0.13% to 25,085.42, while France's CAC 40 rose 0.15% to 8,338.97 and London's FTSE 100 gained 0.24% to 10,497.29.
In commodities, Brent crude futures were last down 0.89% on ICE at $75.62 per barrel, while the NYMEX quote for West Texas Intermediate declined 1.29% to $71.15.
David Morrison, senior market analyst at Trade Nation, said European indices had been subdued as investors weighed optimism around technology stocks against concerns over escalating tensions in the Middle East, where Europe remained exposed through its reliance on imported energy.
"Overall, sentiment remained fragile as the US and Iran resumed hostilities, hitting each other's military targets around the Gulf and the Strait of Hormuz," he said.
"Despite a spike in crude oil prices over the past week, it does appear that investors are taking this latest breakdown between the US and Iran in their stride."
Axel Rudolph, chief technical analyst at IG, said crude was still on track for a weekly gain of around 5% as renewed US-Iran strikes continued to disrupt tanker traffic through the Strait of Hormuz, raising concerns over global energy supplies.
"The oil price is on track for its first weekly gain in a month, rising by around 5% amid renewed US-Iran strikes which disrupt tanker traffic through the Strait of Hormuz, raising concerns over global energy supplies," he said.
Rudolph said negotiations between Washington and Tehran on a longer-term agreement remained ongoing, although the International Energy Agency had warned that a prolonged conflict could hinder efforts to rebuild global oil inventories.
Record crude production from the UAE had helped partly offset supply disruption, he added.
Morrison said oil prices had rallied in the early hours before selling off as Middle Eastern traders hit their desks, with prices picking up again once Europe opened.
"Bottom line: there's less traffic passing through the Strait of Hormuz now than this time last week," he said.
"There's a possibility that peace negotiations could restart."
Spain's IBEX gained after US president Donald Trump appeared to soften his tone on potential trade measures, having earlier called the country a poor Nato partner and threatened to cut off trade ties.
Trump's criticism of Madrid followed disputes over Spain's stance on the US-Israel conflict with Iran and its defence spending.
However, speaking to reporters aboard Air Force One after the Nato summit in Turkey, he said Spain had "come back all the way" and had been "very generous", suggesting that recent information about Madrid's defence spending had influenced his change of view.
Investors were also watching South Korea's SK Hynix as it listed in the US.
"Interest is strong, with reports indicating that the listing is more than seven times oversubscribed," Morrison said.
"The company has become one of the biggest beneficiaries of the global memory chip shortage and growing demand for artificial intelligence infrastructure."
UK retail footfall suffers in the heat
On the economic front, UK retail footfall fell in June as the heatwave kept shoppers indoors, according to the British Retail Consortium.
The BRC-Sensormatic monitor showed total footfall declined 3.4% year-on-year, following a 2.6% drop in May.
High streets were the weakest part of the market, with footfall down 6.2% after a 1.5% fall the month before.
Retail parks saw a 0.3% decline, while shopping centre footfall fell 2.5%.
By region, footfall rose 1.7% in Scotland, but fell 0.9% in Northern Ireland, 2.3% in Wales and 3.0% in England.
BRC chief executive Helen Dickinson said the record heatwave had hit footfall, with high streets seeing the sharpest declines while air-conditioned shopping centres and retail parks proved more resilient.
She said retailers faced a bigger challenge from rising costs, adding that action on business rates and energy costs would help unlock investment in local communities.
UK business confidence meanwhile fell to its lowest level in more than a year in June, according to S&P Global's tri-annual UK Business Outlook survey.
The headline confidence balance for private sector output over the next 12 months fell to +26% from +36% in February, the weakest reading since February 2025.
Confidence in the services sector dropped to +24%, its joint-lowest level since October 2022, with firms citing rising labour costs, low client spending and global uncertainty.
David Owen, principal economist at S&P Global Market Intelligence, said services firms were facing a "triple squeeze" from labour costs, tax concerns and weak consumer demand, leaving them more hesitant on hiring, capital expenditure and research and development.
Manufacturing sentiment held up better but still weakened, with the confidence balance falling to +38%.
Firms pointed to global trade disruption, UK policy changes, overseas competition and skills shortages, while 12-month inflation projections among manufacturers rose to their highest level in more than four years.
Owen said manufacturers were more confident than services firms that they could pass on costs and protect margins, while some expected support from exports and spending in defence, data centres and green energy.
easyJet jumps on surprise takeover bid, chip stocks in the red
In equity markets, easyJet jumped 14.13% after agreeing a surprise 5.7bn takeover deal with US private equity firm Apollo, which trumped a rival bid from Castlelake.
Vodafone rose 12.29% after French telecoms billionaire Xavier Niel became its largest shareholder by buying a 16.21% stake for 4.4bn.
Emirati telecoms group E&, which first invested in Vodafone in 2022, announced the sale of its entire shareholding for 112.5p a share.
Chip stocks were weaker as investors watched SK Hynix's US market debut.
Siltronic fell 1.49%, Soitec dropped 5.86% and ASML Holding declined 2.11%.
Reporting by Josh White for Sharecast.com.
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