European Stocks Decline Amid Mixed Signals on Iran and Ukraine Developments

European stock markets saw a decline as mixed signals emerged from U.S.-Iranian negotiations aimed at resolving the ongoing conflict in the Middle East. U.S. Secretary of State Marco Rubio noted progress in talks and expressed a preference for a diplomatic resolution, stating, "we're going to give it every chance to succeed." However, President Donald Trump emphasized that Iran should not be allowed to control the strategic Strait of Hormuz under any agreement.

While a report suggested that Tehran would restore commercial traffic through Hormuz to pre-war levels within a month of a potential agreement, the White House dismissed this as a "complete fabrication." Tensions escalated further as U.S. forces reportedly conducted strikes in Iran, described by a U.S. official as "measured, purely defensive, and intended to maintain the ceasefire." This news contributed to an uptick in oil prices.

In a separate development, European defense stocks rallied following Ukraine's parliament ratifying a significant loan agreement with the European Union. Ukrainian President Volodymyr Zelenskyy, currently in Sweden, is expected to announce a deal for the provision of Gripen fighter jets, reinforcing earlier agreements made last October. The pan-European Stoxx Aerospace and Defense index rose by 1.7% on the announcement, with notable gains in shares of Saab and other defense contractors.

In other market news, shares of the Spanish online travel agency eDreams surged 10% after reporting a profit that, while an improvement from the previous year, did not meet analyst expectations. Polish energy company Orlen also reported a strong first-quarter profit, with shares up 1.2%. Meanwhile, U.S. market futures showed little change as investors awaited key inflation data set to be released later today.