Europe close: Stocks rebound from six-week low as oil prices retreat

(Sharecast News) - European stocks mostly rose on Friday, with the Stoxx 600 bouncing off a six-week low, as investors watched ongoing geopolitical developments in the Middle East and dovish comments from a Federal Reserve policymaker.

The Stoxx 600 finished 0.1% higher at 536.53 after hitting its lowest since 8 May on Thursday, as small losses in London were outweighed by a 1.3% jump in Frankfurt and solid gains in other markets.

Israel and Iran continued to exchange missile attacks while European foreign ministers were holding talks with Iranian officials in Geneva in an attempt to reduce tensions.

However, the news that US president Donald Trump plans to make any decision on potential US military attacks on Tehran within two weeks eased concerns of an imminent escalation of conflict - at least temporarily. The news prompted a 2.8% drop in Brent crude to $76.67 a barrel.

"Trump's infamous 'two-week period' for making decisions seems to suggest that the rush towards further conflict has been halted, though Iranian intransigence might provoke the president," said Chris Beauchamp, chief market analyst at IG.

"This should also cool oil prices for the time being too, with the market having become relatively desensitised to the back-and-forth of missile launches and air strikes that currently characterises the Iran-Israel war."

Meanwhile, markets were supported by a positive start on Wall Street after the governor of the Federal Reserve showed support for an interest-rate cut at the central bank's next meeting. Christopher Waller said the Fed should "look through" one-off inflationary pressures from trade tariffs and focus on the fact that underlying inflation has slowed.

In equity moves, London-listed Berkeley tumbled 8 as the housebuilder posted a 5% fall in annual earnings but said it was confident about the future against a backdrop of falling interest rates and government plans to ramp up supply using brownfield sites.

BP, TotalEnergies and Shell gushed lower as oil prices fell, while travel stocks TUI, IAG and Carnival benefited from hopes of a de-escalation of Middle East tensions.

Meanwhile, manufacturing and industrial heavyweights in Germany were providing a big lift, including Airbus, Heidelberg Materials, Rheinmetall and MTU Aero Engines.

In economic news, wholesale prices in Germany declined for the sixth straight month in May, with the annual rate of deflation hitting an eight-month high, according to the Federal Statistical Office.

Germany's producer price index fell by 0.2% last month, less than the 0.6% drop registered in April and slightly above the consensus forecast of -0.3%. In year-on-year terms, producer prices were 1.2% lower than last May, following a 0.9% decline in April, matching market forecasts.