European Markets Retreat On Oil Rally, Rate Hike Bets

(RTTNews) - European stocks closed weak on Thursday, hurt by higher oil prices and bond yields, due to a lack of meaningful progress in "diplomatic efforts" to de-escalate Middle East tensions. Rising prospects of another rate hike by the Federal Reserve this year - possibly in October - weighed as well.

Oil prices rose sharply as investors weighed the prospect of improved Saudi export flows against the potential for further supply disruptions.

Brent crude futures climbed to $108.23 a barrel before easing to around $106, still up by about 2.75%. Oil climbed around 4% on Wednesday, snapping a five-day losing streak, amid heightened uncertainty surrounding U.S.-Iran negotiations.

After U.S. President Trump threatened to 'annihilate' Iran, Tehran said it is 'ready for dialogue and diplomacy and negotiations without accepting the language of force.'

Automobile stocks lost ground despite EU new passenger car registrations rising 4.5% year-on-year in August.

The pan European Stoxx 600 lost 0.55%. The U.K.'s FTSE 100, Germany's DAX and France's CAC 40 shed 0.24%, 0.57% and 0.52%, respectively. Switzerland's SMI edged down by 0.11%.

Among other markets in Europe, Austria, Belgium, Czech Republic, Denmark, Finland, Greece, Iceland, Ireland, Netherlands, Russia, Spain, Sweden and Türkiye closed weak.

Poland and Portugal ended higher, while Norway closed flat.

In the UK market, Computacenter, Rentokil Initial and Standard Life shed 4.2%-4.4%. Compass Group, Kingfisher, Endeavour Mining, ICG, St. James's Place, Investec, Weir, Airtel Africa, Fresnillo, Halma, Informa, Rio Tinto and Metlen Energy & Metals lost 1.7%-3.6%.

JD Sports Fashion and BP gained about 3% and 2.7%, respectively. Ithaca moved up 2% and Shell gained 1.7%, while Diageo, Bunzl, Tesco, Diploma, British American Tobacco and Haleon climbed 1%-1.4%.

In the German market, Infineon lost nearly 4%. Rheinmetall, Scout24, Volkswagen, BMW, Deutsche Bank, Porsche Automobil Holding and Mercedes-Benz lost 2%-3.25%.

Daimler Truck Holding, Siemens Energy, Heidelberg Materials, RWE, Adidas, Deutsche Post, Vonovia, SAP, Fresenius and Zalando also ended notably lower.

Beiersdorf climbed about 3%. Hannover Re, Munich RE, Allianz and MTU Aero Engines gained 1.2%-2.2%.

In the French market, Stellantis dropped more than 4%. EssilorLuxottica shed 3.5%. Societe Generale lost 3.3%

Teleperformance, Thales, Legrand, Capgemini, ArcelorMittal, STMicroelectronics, Accor, BNP Paribas, Renault, Bureau Veritas, Sanofi, Schneider Electric and Saint-Gobain ended lower by 1%-3%.

Eurofins Scientific moved up by over 2%. TotalEnergies and AXA both ended higher by about 1.8%. L'Oreal gained 1.1%.

In economic news, German business confidence rose to its highest level in more than three years in September as the economy continued its recovery, monthly survey data from the ifo Institute showed.

The business climate index rose to 89.9 in September from 88.8 in the previous month. This was the highest score since May 2023 and was also above forecast of 89.1.

The current situation index climbed to 89.5 in September from 88.5 in the previous month. At 90.4, the expectations index rose to the highest level since October 2025, from 89.0 in August.

France's manufacturing business climate index stood at 101 in September, unchanged from August's revised figure and July's reading, but slightly below market forecasts of 102.

French consumer confidence remained weak and steady for the second straight month in September. The consumer sentiment index came in at 86.0 in September, the same as in the previous two months. Meanwhile, economists had expected the score to fall to 85.0.

France's overall business climate indicator score fell to 96 in September from 98 in the previous month and moving further below its long-term average of 100.

The euro area private sector expanded at the fastest pace since April 2023 amid solid expansions in both the services and manufacturing sectors, survey data from S&P Global revealed Wednesday. The flash composite output index advanced to 53.1 in September from 52.0 in the prior month. The score was seen at 51.7.