European stocks closed on a strong note on Friday, buoyed by hopes Iran and the US will reach a peace agreement sometime soon, following US President Donald Trump calling off his planned attacks on Iran yesterday.
Enthusiasm surrounding the SpaceX IPO and its market debut, and a sharp drop in oil prices helped as well in lifting the sentiment.
Investors also digested the latest batch of regional as well as U.S. economic data.
The US president said a "great settlement" to end the conflict with Iran has been reached, and that a signing ceremony could take place in Europe as early as this weekend, although Tehran said no final deal has been approved and that disputes over frozen funds and Strait of Hormuz security remain unresolved.
The pan-European Stoxx 600 climbed 1.88%. The UK's FTSE 100, Germany's DAX and France's CAC 40 moved up 1.63%, 1.76% and 1.83%, respectively. Switzerland's SMI gained 1.32%.
Among other markets in Europe, Austria, Belgium, the Czech Republic, Denmark, Finland, Greece, Iceland, Ireland, the Netherlands, Poland, Portugal, Spain, Sweden and Turkey closed with strong gains.
Norway and Russia ended weak.
In the UK market, bank and mining stocks were among the prominent gainers.
Barclays gained about 5.3%. Natwest Group climbed 4.5%, Lloyds Banking Group moved up 4.3% and Standard Chartered advanced 4.1%, while HSBC Holdings ended 3.85% up.
Miners Anglo American Plc, Endeavour Mining and Antofagasta moved up 5.2%, 5% and 4.9%, respectively. Fresnillo climbed 4.53%, Rio Tinto gained 2.9% and Glencore ended 2.56% up.
IAG climbed more than 7%. Lion Finance rallied nearly 6%. Compass Group, Rolls-Royce Holdings, Segro, Marks & Spencer, Airtel Africa, Polar Capital Technology Trust and St. James's Place gained 4%-5%.
3i Group, Intercontinental Hotels Group, ICG, Tritax Big Box REIT, Burberry Group, Prudential, Melrose Industries, Experian, Informa, Games Workshop, Whitbread and Next were also among the major gainers from other sectors.
Energy stocks BP and Shell shed about 2% and 1.7%, respectively, weighed down by weak oil prices.
BAE Systems closed 1.6% down, while Centrica, AstraZeneca, Bunzl and Halma ended with moderate losses.
In the German market, Deutsche Bank closed with a sharp gain of about 6.5%. Heidelberg Materials and Siemens Energy moved up 5.2% and 4.5%, respectively.
Infineon, Continental, Volkswagen, Vonovia, Commerzbank, Daimler Truck Holding, Fresenius Medical Care, Siemens, Gea Group and Deutsche Telekom climbed 2%-4%.
Porsche Automobil Holding, Adidas, MTU Aero Engines, Henkel, BASF, Deutsche Boerse, Mercedes-Benz, Fresenius, Bayer and Deutsche Post also ended with impressive gains.
Rheinmetall, Zalando, Merck, Symrise and Hannover Rueck closed notably lower.
In the French market, Societe Generale surged more than 6%. ArcelorMittal, Accor and BNP Paribas gained 5%-6%. STMicroelectronics, Safran, LVMH, Kering, Renault, Saint-Gobain and Hermes International moved up 3.2%-4%.
EssilorLuxottica, Credit Agricole, Michelin, Airbus, Stellantis, Vinci, Bouygues, Air Liquide, L'Oreal, Danone, Teleperformance and Bureau Veritas also ended with sharp gains.
Dassault Systemes shed about 5.5%. TotalEnergies and Thales closed lower by about 2.1% and 1.3%, respectively.
In economic news, data from Destatis confirmed that consumer price inflation weakened to 2.6% in May from 2.9% in April, which was the highest since December 2023.
Likewise, EU harmonized inflation slowed to 2.7%, as estimated, from 2.9% a month ago.
Final data from the statistical office INSEE showed France's inflation accelerated as estimated in May on energy and services costs, rising by 2.4% in the month, from 2.2% in April. This was the highest since February 2024, when inflation was 3%. The inflation rate matched the preliminary estimate published on May 29.
Similarly, harmonized inflation advanced to 2.8%, matching estimate, from 2.5% in the previous month.
Month-on-month, consumer prices edged up 0.1%, as estimated, after rising 1% in the prior month. Likewise, the harmonized index of consumer prices also moved up 0.1%, in line with estimate, following a 1.2% gain.
Data from the Office for National Statistics showed the UK economy contracted in April due to weakness in the services sector. Real gross domestic product posted a contraction of 0.1% in April, in contrast to a 0.3% expansion in March. This was the first monthly fall since August 2025 and also came in line with expectations.
The decline was driven by a 0.2% fall in services output. This was offset by a 0.1% increase in construction output.
At the same time, industrial production showed no growth after falling 0.2% in March. Within in industrial output, manufacturing output climbed 0.4% but came in slower than the 1.2% rise seen in March.
Another report from the ONS showed that the visible trade deficit narrowed in April as exports increased amid falling imports. The visible trade gap fell to GBP 26.05 billion in April from GBP 27.22 billion in March.
Exports logged faster monthly growth of 2.4%, while imports dropped 0.7%.
The total trade balance that combines goods and services trade, registered a deficit of GBP 8.4 billion compared to a shortfall of GBP 9.7 billion in March.
