European equity markets moved higher on Friday as investors weighed guarded optimism about progress in talks with Iran against lingering risks that continue to pressure energy markets and growth prospects.
By 03:14 ET (07:14 GMT), the pan-European Stoxx 600 had climbed 0.5%. Germany's Dax was up 0.4%, France's CAC 40 advanced 0.4%, and the U.K.'s FTSE 100 rose 0.3%.
Comments from Washington and Tehran lent some support to sentiment. U.S. Secretary of State Marco Rubio indicated that discussions between the two sides have shown "good signs" of progress. A senior Iranian official, quoted by Reuters, said gaps in the negotiations have narrowed. Those remarks contrasted with a separate Reuters report on Thursday that said Iran's Supreme Leader had issued a directive that no enriched uranium should leave the country - a development that represents a significant point of contention with demands from President Donald Trump. The juxtaposition of conciliatory signals and hardline directives left markets in a cautious posture.
Energy markets continued to reflect the geopolitical uncertainty. The Strait of Hormuz - a key maritime route through which about a fifth of the world's oil passes - remains effectively closed, sustaining upward pressure on oil prices. Analysts cited in reporting have suggested that a reopening of the strait would likely benefit European equities, given the region's reliance on energy shipments through that corridor, and could see European shares outperform some global peers if transit resumed.
Economic data from across the euro area were also in focus. Consumer sentiment in Germany showed possible early signs of improvement, while the overall economy was confirmed to have expanded by 0.3% in the first quarter of the year. Despite these readings, ING analysts warned that European business activity has flashed warning signs consistent with a "stagflationary effect" stemming from the conflict in Iran - a situation in which inflation remains elevated while growth is subdued.
Market expectations for monetary policy reflected inflationary concerns tied to energy. Money markets were pricing in a European Central Bank rate increase later in 2026 as policymakers seek to hold down an energy-driven inflation wave.
On the corporate front, Swiss luxury goods group Richemont reported fiscal fourth-quarter revenue that beat expectations, a result that sent its shares higher in early trading.
Overall, trading opened with modest gains for major indexes amid a mixture of cautiously positive diplomatic signals, persistent energy market strains and tentative macroeconomic improvement in parts of Europe.