European shares rise as oil slips, investors watch Middle East

European shares rose on Thursday as oil prices eased, although investors remained cautious on whether the latest developments in the Middle ‌East would lead to a durable peace deal.

Brent crude futures fell 2.8% to $95.06 a barrel ‌after Israel and Lebanon agreed on Wednesday to implement a ceasefire.

However, hopes for a broader de-escalation were tempered after Hezbollah rejected the deal ​and Israel said it would not withdraw troops from Lebanon, complicating U.S. President Donald Trump's efforts to forge a peace deal with Iran.

Investors were looking for firmer evidence that a breakthrough was possible after several failed rounds of talks.

The pan-European STOXX 600 finished 0.5% higher at 624.45 points, led by gains in healthcare with French biotech Abivax ‌jumping 17.8% and rebounding from losses ⁠earlier in the week.

The STOXX 600 remained on track for a marginal weekly decline, with the Strait of Hormuz, a key global oil-shipping route, still mostly shut.

Persistent price pressures ⁠have led markets to price in a 25-basis-point rate hike by the European Central Bank at next week's meeting, according to LSEG data.

"The well telegraphed policy hike coming next week reveals a preference for curbing upside inflationary risks rather ​than ​addressing downside growth risks," said a group of macro analysts ​led by Rune Thyge Johansen at Danske ‌Bank.