European shares drop, set to end the week lower

The pan-European STOXX 600 index dropped 0.5% to 611.04 points

European shares dropped ​on Friday and were set to end the week lower, as ‌investors remained concerned about the lack of progress toward a resolution to the Middle East war, while also keeping a close watch on corporate earnings.

The pan-European STOXX 600 index dropped 0.5% to 611.04 points, as of 0715 GMT. ​It was on track to log 2.5% weekly decline after rising ⁠for four straight weeks.

Most of the major markets mirrored the ​decline.

Investor sentiment remained fragile despite signs of diplomatic movement. Israel and Lebanon agreed to ​extend their ceasefire by three weeks following a White House meeting brokered by U.S. President Donald Trump, who said he was willing to wait for “the best deal” to ​end the conflict with Iran.

Still, the war has now stretched to nearly ​eight weeks, with Tehran and Washington remaining at an impasse.

Markets have swung between optimism ‌that ⁠a breakthrough may be near and concern that the war could drag on, with little clarity on when tensions might ease.

Benchmark Brent crude hovered above $100 per barrel, as the Strait of Hormuz remains effectively shut, adding to ​worries over energy ​supplies and inflation.

Among ⁠sectors, most traded in negative territory, with aerospace and defence leading the declines, down 2.4%.

Technology was the standout gainer, ​adding 0.7%, helped by a 5.5% jump in SAP ​shares after ⁠the German software maker beat first-quarter profit estimates on strong growth in its cloud business.

Germany’s DAX outperformed other major European indexes and was up 0.1%, supported ⁠by ​gains in SAP.

European corporate earnings have so far shown ​relative resilience, but the escalating risks tied to the Middle East war and surging oil ​prices continue to cloud the outlook.