European shares traded in a narrow range on Thursday as investors weighed escalating geopolitical tensions in the Middle East and uncertainty surrounding the U.S. interest rate outlook, while a fresh batch of corporate earnings provided stock-specific momentum, Reuters reported.
The pan-European STOXX 600 index edged 0.1% higher to 645.67 in early trade.
Investor sentiment remained cautious after the United States carried out fresh strikes in Iran on Wednesday, intensifying a conflict that has been ongoing for five months and widening its regional impact. The latest developments also pushed energy prices higher, with Brent crude futures climbing above $90 a barrel.
The geopolitical uncertainty added to concerns stemming from the U.S. Federal Reserve's latest policy decision. Reuters reported that the Fed kept interest rates unchanged on Wednesday, but comments from Chair Kevin Warsh reaffirming the central bank's commitment to tackling inflation left investors uncertain about the future path of monetary policy.
The combination of geopolitical risks and ambiguity over U.S. interest rates limited gains in European equities despite encouraging corporate earnings from several major companies.
Among sectoral movers, energy stocks rose 0.3%, benefiting from higher crude oil prices as supply concerns resurfaced following the escalation in the Middle East.
In company-specific trading, Schneider Electric surged 7% after the industrial technology group raised its full-year guidance, reflecting confidence in demand and business performance.
L'Oréal gained 2.2% after the French cosmetics giant reported second-quarter sales that exceeded market expectations, supported by resilient consumer demand across key markets.
However, Adidas was the biggest loser on the STOXX 600, tumbling 15% despite lifting its annual sales forecast, as investors appeared disappointed with other aspects of the company's outlook.
Airbus slipped 2.3% even after posting quarterly results that came in ahead of analysts' expectations, suggesting investors had already priced in much of the positive news.
Overall, European markets remained caught between supportive corporate earnings and mounting macroeconomic and geopolitical risks, with investors closely monitoring developments in the Middle East and signals from the Federal Reserve for further direction.
