The pan-European STOXX 600 index was down 0.2% at 612.59 points
European shares pull back as fragile US-Iran truce weighs on sentiment
European shares retreated on Thursday, after their strongest rally in over four years, as investors remained wary about a fragile U.S.-Iran ceasefire and its implications for oil prices and global inflation.
The pan-European STOXX 600 index was down 0.2% at 612.59 points, after paring earlier losses following reports Israel and Lebanon could start direct negotiations soon.
European markets rallied on Wednesday after U.S. President Donald Trump agreed to a two-week ceasefire, sparking optimism that oil and gas shipments through the crucial Strait of Hormuz might resume operations.
However, Israel continued military operations in Lebanon on Wednesday while Tehran did not lift its near-total blockade of the Strait leading to renewed concerns over the economic impact of the conflict.
"(Yesterday's) rebound was very overdone given the fact that it is still just the two-week ceasefire and today obviously there is concerns over the durability of that ceasefire and the key focus for the market remains the Strait of Hormuz," said Fiona Cincotta, senior market analyst at City Index.
