Europe close: Stocks mixed amid US-Iran uncertainty

(Sharecast News) - European stock markets finished in mixed fashion on Wednesday, with many indices teetering at record highs as investors awaited signs of tangible progress in US-Iran peace talks.

The benchmark Stoxx 600 finished just 0.28 points (+0.04%) higher, though still set a new all-time closing high of 657.14. Indices in Frankfurt and Paris, which reached records on Tuesday, pulled back, but stocks in London, Madrid and Zurich inched higher.

The Dow climbing to a new high again after the opening bell on Wall Street, though the S&P 500 stalled after hitting a new peak the previous day.

"Overall, the stock market rally could take a pause here, especially in the US. However, we think that if this happens it will be temporary, as there are multiple factors that could drive stocks higher from here, including a lower oil price, and a strong Q2 earnings season," said Kathleen Brooks, research director at XTB.

Oil prices stabilised on Wednesday after dropping to a four-week low on rising hopes of diplomatic progress following claims by US Treasury Secretary Bessent that a final deal between the US and Iran to reopen the Strait of Hormuz could be reached this week. Brent was up just 0.2% at $79.46 a barrel.

Negotiations, which are taking place in Rome and are scheduled to run until Thursday, revolve around "expanding the pilot zone process, resolving all outstanding border issues, and working on a comprehensive peace and security agreement", according to a US State Department official, cited by AFP.

Meanwhile, Axios reported that the US was nearing a 60-day interim deal to reopen the Strait of Hormuz without tolls. The publication, which cited two regional sources and a US official, said the US was aiming to make an announcement on Wednesday that sets up a temporary arrangement between Oman and Iran in the Strait, which could be extended.

On the economics front, eurozone business activity strengthened in July, with the bloc's private sector expanding at its fastest pace in eight months, according to data published on Wednesday.

The S&P Global Eurozone Composite PMI rose to 52.0, up from 50.0 in June, signalling a solid improvement in economic momentum at the start of the third quarter.

The rebound was driven largely by services, where the PMI climbed to 51.7 from 49.4, marking a return to growth and a fivemonth high. Firms reported firmer demand, improved client confidence and a pickup in new business, which rose at the quickest rate since last November.

In equity news, Sandoz and Glencore surged after releasing results, while UK retailer Next also jumped after lifting guidance for the second time this fiscal year.

Heineken also gained after keeping its full-year outlook after reporting volume growth and higher profits in the first half, supported by its premium brands and productivity savings.