European shares edge higher ahead of ECB rate verdict; Mideast tensions eyed

By Utkarsh Hathi and Johann M Cherian

The STOXX 600 index inched higher on Thursday, after closing at a three-week low in the previous session, with the European Central Bank widely expected to deliver a rate hike, while escalating tensions in the Middle East continued to pressure markets.

Crude prices were near $95 a barrel as fresh airstrikes by the U.S. and Iran added to traders' concern over energy supplies, with no sign of the Strait of Hormuz, a critical global oil shipping route, reopening soon.

Traders are pricing in a 25-basis-point ECB rate hike, according to LSEG-compiled data, and all eyes will be on the central bank's monetary policy path commentary, given the repercussions of the oil shock on the economy.

"The reaction in markets is going to depend on whether (ECB chief) Christine Lagarde says that essentially this is a one-off or this is just the start of a broader tightening cycle that could threaten growth further, especially in the euro area, which has already been quite lethargic," said Daniela Hathorn, senior market analyst, Capital.com.

The pan-European STOXX 600 index edged 0.5% higher to 621.23 points by 0839 GMT, with energy and miners among top sectoral gainers.

Global tech stocks were rocked by concerns over higher spending on AI piquing after Oracle forecast higher-than-expected capital spending. Further, UBS downgraded European IT stocks to "neutral" from "attractive", citing elevated valuations and 'AI returning to the fore'.

European software stocks such as SAP SE dropped 4.6%, Capgemini fell 3.6% and Dassault Systemes declined 3.2%.

On the flipside, semiconductors did well, with BE Semiconductor and ASM International gaining 5% and 3.5%, respectively, as investors view the sector to benefit from the AI boom.

The broader tech has seen some volatility since late last week as AI stocks globally have paused from a strong rally over the past two months.

Hugo Boss rose 7.8% after the UK's Frasers Group launched a €2 billion ($2.31 billion) takeover offer for the struggling German fashion brand.

Banks gained 1.1%, with UK lenders HSBC and Standard Chartered up more than 2.5%, rebounding from sharp losses over the past week after China tightened investment rules.

Among others, Wizz Air shares jumped 5.2% after the firm's annual profit beat estimates. However, the carrier did not provide a forecast for fiscal 2027, citing an uncertain outlook.

Telecom shares led sectoral losses, with Swisscom dipping 1.7% after Morgan Stanley assumed coverage with "underweight", while Deutsche Telekom fell 3.7%.

($1 = 0.8660 euros)

(Reporting by Utkarsh Hathi and Johann M Cherian in Bengaluru; Editing by Rashmi Aich and Harikrishnan Nair)

Copyright Reuters or USA Today Network via Reuters Connect.

This story was originally published June 11, 2026 at 4:07 AM.