European shares hit over two-week highs on signs of progress in US-Iran talks

European shares rose to a more than two-week high on Friday, lifted by technology stocks with investors optimistic about signs of progress in U.S.-Iran peace talks despite both sides remaining at odds over key issues.

The pan-European STOXX 600 climbed 0.6% to 624.50 points by 0801 GMT and was on track to end the week with significant gains.

Key disagreements between Tehran and Washington involve Iran's uranium stockpile and controls on the Strait of Hormuz.

U.S. Secretary of State Marco Rubio said there had been "some good signs" in the talks, while a senior Iranian source told Reuters that gaps between the two sides had narrowed.

Analysts expect an agreement to include the opening of the strait to lift European equities that have lagged peers, as the region's dependence on oil imports weighs on markets and drives inflation.

"We are neutral on Europe and eurozone equities, given their sensitivity to higher energy costs, while we view the more defensive Swiss market and European healthcare more favourably," said Mark Haefele, chief investment officer at UBS Global Wealth Management.

AI optimism that has driven global indexes to record highs also helped the European tech index rise almost 2% on the day. Chip giant Nvidia's sales outlook topped estimates this week.

Semiconductor shares Infineon Technologies, STMicroelectronics, ASM International and ASML added between 2.5% and 3.7%.

Cartier owner Richemont added 1.2% after reporting better-than-expected fourth-quarter revenue. The luxury index rose 0.5%.

Adidas and Puma climbed 2.1% and 3.3%, respectively, after U.S. peer Deckers Outdoor's upbeat forecast.

German logistics giant DHL advanced 3.7% after Deutsche Bank upgraded the stock to "buy" from "hold".

Meanwhile, Puig dropped almost 15% after the Spanish perfumery ended merger talks with U.S. cosmetics maker Estée Lauder.

Julius Baer fell 9% after the Swiss bank's net new money inflows came in below expectations.

Official data showed German consumer sentiment recovered heading into June, while a separate reading confirmed that the economy grew by 0.3% in the first quarter of 2026. The DAX gained 0.5%.

Figures showed UK retail sales fell by the most in nearly a year in April as consumer spending waned amid the Iran war and rising energy costs. The blue-chip FTSE 100 was up 0.3%.

Europe's economy commissioner Valdis Dombrovskis became the latest official to say the European Central Bank would need to react to rising inflation.

Money markets price in at least two ECB interest rate hikes before the end of the year.

(Reporting by Twesha Dikshit; Editing by Subhranshu Sahu)

Copyright Reuters or USA Today Network via Reuters Connect.

This story was originally published May 22, 2026 at 11:33 AM.