European shares muted as investors assess Mideast developments, corporate earnings

Thu, 23rd Apr 2026 17:34

* L'Oreal shares rises after strong first quarter

* Euro zone business activity contracted in ⁠April-PMI

* Nokia hits 16-year high after AI business outlook raised

* Nestle says "very little impact" of Iran war, shares surge (Updates with closing numbers)

April 23 (Reuters) - European shares were little changed on Thursday as ‌investor worries over collapsed U.S.-Iran peace talks and weak economic data outweighed upbeat corporate results. The pan-European STOXX 600 index closed flat at 614.20 points. ⁠Regional bourses were mixed, with France's CAC 40 rising 0.9%, while Spain's ⁠IBEX 35 dropped 0.7%.

Iran released footage of commandos storming a cargo ship, underlining its grip on the Strait of Hormuz following the collapse of peace talks. The developments left markets nervous about the durability of the fragile ceasefire.

European equities remain below pre-war levels with analysts pointing to their vulnerability to high energy ‌prices, lagging behind their U.S. peers as Wall Street indexes trade near record highs.

"Europe has a lot of industrial sectors that are cyclically impacted. I'm not talking about defence-related, which will be more shielded, but in terms of the exposure to the global economy," said Janet Mui, head of market analysis at RBC Brewin Dolphin.

"Analysts will be very closely watching the sector divergence within European sectors because of the impact of the war, the renewed inflation pressure, and also the weakening growth backdrop."

CORPORATE EARNINGS ‌ON TAP Company results offered some relief. The outlook for European corporate health has slightly improved, the latest LSEG data showed, with blue-chips excluding energy expected to report a 0.4% increase ‌in first-quarter earnings.

Nestle shares jumped 5.9% after the world's biggest packaged food company said it had seen "very little impact" on global business from the Iran war so far. The food and beverages index rose 1.6%.

The telecom sector climbed 1.6%, aided by Nokia's 6.4% surge after the network gear maker raised growth targets for its AI business and beat first-quarter profit estimates.

The personal and household goods index ‌gained 1.3%. L'Oreal shares jumped 9%, recording its biggest one-day gain since 2008, after the French cosmetics group posted first-quarter sales that beat analysts' expectations.

Safran rose 2.4% after the French jet engine maker said it expected its missile propulsion business to grow sharply over ⁠the medium ⁠term, adding that the Middle East conflict was not expected to significantly affect the ‌second quarter.

The healthcare sector edged 0.2% higher. French drugmaker Sanofi rose 1.2% after reporting first-quarter results above expectations.

Roche shares rose 3.8%, despite the Swiss drugmaker flagging a drop in first-quarter sales due to foreign exchange impact. Bloomberg reported that the firm's cancer pill would be launched ‌by year end.

But banking shares dropped 1.2%, weighing heavily on the index.

On the economic front, business activity in the euro zone suffered a surprise contraction in April with the Iran war sapping demand as prices soared. (Reporting by Ragini Mathur, Twesha Dikshit, and Utkarsh Hathi in Bengaluru; Editing by Rashmi Aich, Shreya Biswas and Louise Heavens)