European shares edged higher on Thursday as falling oil prices offered some relief to investors, while stalled U.S.-Iran peace efforts and continued disruption in the Strait of Hormuz kept sentiment subdued, Reuters reported.
The pan-European STOXX 600 rose 0.2% to 660.49 points by 0714 GMT, after retreating from record highs in the previous session. However, gains remained limited as markets assessed the economic impact of the ongoing Middle East conflict.
Britain's FTSE 100 slipped 0.3% despite data showing that the UK economy unexpectedly expanded in June, providing some reassurance about the country's domestic growth outlook.
U.S. inflation data came broadly in line with expectations, easing concerns about a renewed acceleration in price pressures and reducing fears of further Federal Reserve rate hikes. However, European investors remained cautious amid limited progress on efforts to reopen the Strait of Hormuz and advance a U.S.-Iran peace agreement, Reuters said.
Oil prices declined on Thursday after forecasters lowered their estimates for global demand this year, citing the broader economic fallout from the Middle East conflict. Weaker demand expectations helped shift market attention away from supply risks linked to the disruption around the Strait of Hormuz.
Europe's energy sector was little changed, while travel and leisure stocks gained 0.6% as lower oil prices improved the outlook for fuel costs. Banks were among the strongest performers, with the sector rising 0.9%.
The European earnings season was also entering its final stretch, with only a handful of companies still due to report results.
Shipping group Maersk surged 8.3% after beating profit expectations by a wide margin and raising its full-year earnings guidance for the second time this year. Reuters reported that the Danish company's performance was supported by higher freight rates amid the Middle East conflict and strong demand.
Overall, European markets remained focused on developments in the Middle East, oil-price movements and the implications for inflation and global economic growth as investors assessed the outlook for monetary policy.
