Europe close: Stocks mixed on latest Middle East developments
By Josh White
Date: Thursday 16 Apr 2026
(Sharecast News) - European equities closed mixed on Thursday as investors weighed ongoing geopolitical developments in the Middle East, including efforts to end the conflict involving Iran and Lebanon, alongside mounting concerns over energy supply disruptions, with sentiment remaining sensitive to the trajectory of diplomatic talks.
"The continuation of the equity rally now rests on further talks between the US and Iran," said Chris Beauchamp, chief market analyst at IG, adding that "headlines can only drive a market so far.
"Having posted an eye-watering surge from the end of March, equity markets now need substantive progress in talks if the recovery is to make further progress."
The pan-European Stoxx 600 edged 0.05% lower to 616.95, as Germany's DAX rose 0.36% to 24,154.47, while France's CAC 40 slipped 0.14% to 8,262.70.
London's FTSE 100 outperformed, gaining 0.29% to 10,589.99.
Oil prices moved sharply higher, with Brent crude last up 3.77% on ICE at $98.51 per barrel, and the NYMEX quote for West Texas Intermediate rising 2.46% to $93.54, reflecting continued supply concerns linked to the conflict.
Patrick Munnelly, market strategy partner at TickMill, said "UK equities traded modestly higher on Thursday, with the major indices supported by strength in materials, financials, and construction-related names, as investors responded positively to renewed signs of possible de-escalation in the Middle East," adding that "the tone was broadly constructive across cyclicals, with investors also digesting stronger-than-expected domestic growth data."
Sentiment was influenced by diplomatic signals, after US president Donald Trump said via social media that Lebanese and Israeli officials would meet for the first time in three decades, although the claim was disputed by Beirut, adding to uncertainty over the trajectory of the conflict.
Energy market concerns intensified after International Energy Agency chief Fatih Birol warned that Europe could run out of jet fuel within six weeks if oil flows remained disrupted.
He described the situation as "the largest" energy crisis ever faced, cautioning that "it is going to have major implications for the global economy," adding that "the longer it goes, the worse it will be for the economic growth and inflation around the world."
Birol warned of "higher petrol prices, higher gas prices, high electricity prices," and said some regions would be hit harder, particularly developing economies in Asia, Africa and Latin America, before the impact spread to Europe and the Americas.
He added that if the Strait of Hormuz remained closed, "we will soon hear the news that some of the flights from city A to city B might be cancelled as a result of lack of jet fuel," while cautioning against the longer-term risks of Iran's proposed "toll booth" system for oil shipments.
"If we change it once, it may be difficult to get it back," he said, warning it could set a precedent for other key shipping routes such as the Malacca Strait.
"I would like to see that the oil flows unconditionally from point A to point B."
Euro area inflation revised slightly higher, UK economy sees stronger-than-expected growth
On the macroeconomic front, eurozone inflation for March was revised slightly higher, with consumer prices rising 2.6% year on year, up from 1.9% in February and above the flash estimate of 2.5%.
Energy inflation was revised to 5.1% from 4.9%, while core inflation remained unchanged at 2.3%, according to Eurostat.
In the UK, economic data pointed to stronger-than-expected growth prior to the recent escalation in energy prices.
GDP expanded by 0.5% in the three months to February, ahead of expectations for a 0.2% increase, with January growth revised up to 0.3%.
Monthly GDP rose 0.5% in February, marking the fastest expansion in more than two years.
Services output grew 0.5% and production increased 1.2%, offsetting a 2.0% decline in construction.
Munnelly said "UK data showed that the economy recorded its strongest monthly expansion in a year in February, providing an additional tailwind for domestically focused equities," adding that "that combination - stronger activity data but no clear signal of imminent policy tightening - was broadly supportive for risk assets."
ONS chief economist Grant Fitzner said growth was driven by sectors including wholesaling, market research, hospitality and publishing, while car production recovered from earlier disruption.
However, the outlook remained clouded by rising energy costs.
The International Monetary Fund cut its UK growth forecast for 2026 to 0.8% from 1.3%, warning of a "large negative effect" from higher prices.
Barret Kupelian, chief economist at PwC, said the data suggested the UK economy had been "finding its feet," but warned that "geopolitics may yet kick the chair away," adding that while firms may absorb higher costs in the short term, prolonged disruption risks feeding through into prices, margins and growth.
Gerresheimer surges, Barry Callebaut melts
Among individual stocks, Gerresheimer surged 19.44% after creditors agreed to extend the deadline for submitting its financial accounts.
Tesco gained 3.71% after reporting higher annual profits despite warning of economic uncertainty linked to the Middle East conflict, with Munnelly noting that "the market looked through the cautionary tone and sent the shares higher."
On the downside, Barry Callebaut fell 15.59% after the Swiss chocolate maker cut its operating profit forecast, citing supply chain disruption and overcapacity in the cocoa market.
Airline stocks were also weaker, with easyJet down 5.81% after warning of a wider first-half loss due to rising fuel costs, while Ryanair dropped 6.35% on similar sentiment, with Munnelly adding that easyJet was "among the notable laggards ... as the conflict continued to weigh on trading conditions and demand visibility."
Reporting by Josh White for Sharecast.com.
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