Europe midday: Shares rally, oil retreats amid conflicting reports on US Iran plans

(Sharecast News) - European stocks rallied at lunchtime as oil prices retreated amid conflicting reports about US plans to end the Hormuz strait blockade, while eurozone GDP and inflation data were also in focus amid a busy day for earnings and economic news.

The pan-regional Stoxx 600 index was up 0.43% to 605 at 1156 BST with major bourses mixed. Germany's DAX gained 0.51%, France's CAC 40 declined 0.37% and Italy's MIB was flat.

Brent crude jumped to $126 after Axios reported that the US military would brief President Donald Trump on potential action against Iran.

However, by lunchtime the price had fallen back to $116 a barrel - a decline on the day of 1.47% - after a report Washington was pressing ahead with plans for an international coalition to open the strait of Hormuz, according to a State Department cable seen by the Reuters news service.

"Oil prices remain a key consideration for investors and traders alike, with Brent crude having hit a four-year high on growing concerns that we could soon see the economic war revert back into a military one. Iran's insistence that they will hold out as long as is required means that at some point Trump has to either escalate or capitulate," said Scope Markets analyst Joshua Mahony.

"For the President, his desire to draw a line under the conflict has been seen as a weakness rather than a driver for intensified negotiations. The Iranian view that this is a once in a lifetime opportunity to strengthen their hand from both an economic and defensive perspective means that both sides will want to ensure they get the right deal before agreeing to end the blockade."

"Crucially, while Trump managed to keep a lid on energy prices through optimistic comments and reports of progress, that phase is over now. As such, the gradual climb higher for energy prices looks to be here to stay, driving the likes of gold lower and the dollar higher."

In economic news, the eurozone grew by 0.1% in the first quarter, while inflation jumped to 3% in April driven by an almost 11% surge in energy prices.

In the UK, the Bank of England held interest rates steady at 3.75% as policy makers voted by a majority of eight to one to maintain the cost of borrowing. It is the second time it has kept rates on hold since the outbreak of the Iran war which has sent global energy prices soaring and reignited inflation fears.

The German economy grew by an unexpected 0.3% in the first quarter compared with the previous three-months, according to preliminary official data. Analysts had expected a rise of 0.2%.

A separate release revealed unemployment in Europe's largest economy rose more than expected in April, pushing above the 3 million mark with a rise of 20,000, according to official figures. Economists had expected a rise of 4,000.

In France, the economy stagnated in the first three months of the year, after posting growth of 0.2% in the fourth quarter of 2025.

On the equities front, shares in auto maker Stellantis slumped despite first quarter earnings smashing estimates.

Arcadis surged as the Dutch design, engineering and management consulting company posted a 7% rise in order intake for the first quarter.

Shares in United Utilities surged after the water company unveiled plans to raise �800m to help fund a wide-ranging, multi-billion pound investment in its infrastructure.

Reporting by Frank Prenesti for Sharecast.com