European stocks finish lower as oil rises and investors bet on rate hikes

The bounce back in European stocks was short-lived on Friday, as oil prices rose and investors weighed the cautious tone struck by central banks across the continent in the previous session.

The pan-European Stoxx 600

 closed 1.7% lower, wiping out its morning advance. All major regional bourses ended the session in negative territory.

Friday morning had brought a brief reprieve to markets after regional stocks closed sharply lower on Thursday, as further escalation in the U.S.-Iran war raised concerns that an energy shock could put inflationary pressure on the global economy. Oil prices earlier this week briefly touched $119 a barrel, fueling a risk-off sentiment. This led to another sell-off across most asset classes on Friday.  

In corporate news, British engineering firm Smiths Group

’s shares ended the day down 9.9% after missing half-year revenue growth ‌estimates on Friday. The firm’s CEO also announced plans to return another £1.5 billion to shareholders by 2027 with an additional share buyback program.

Oil prices continued to climb, despite U.S. Treasury Secretary Scott Bessent saying Washington may lift sanctions on Iranian crude stored aboard tankers in a bid to cool energy costs.