European shares edged higher on Friday, with the benchmark STOXX 600 poised for weekly gains, as investors maintained guarded optimism ahead of US-Iran diplomatic talks scheduled for the weekend, although the recently established ceasefire between the two nations showed signs of fragility.
The pan-European index was up 0.2% at 613.48 points, as of 0716 GMT, on track to mark its third consecutive weekly rise.
The delicate two-week ceasefire between the US and Iran faced mounting pressure a day before scheduled negotiations in Pakistan on Saturday.
Washington has accused Tehran of violating commitments regarding the Strait of Hormuz, while Israeli strikes in Lebanon, which Iran claims breach the ceasefire terms, have further complicated the diplomatic landscape.
However, Israel signalled a potential diplomatic opening, saying it was ready to begin direct talks with Lebanon as soon as possible, offering a glimmer of hope.
On Friday, healthcare and technology stocks led the gains in Europe, rising 0.5% and 0.6%, respectively.
Meanwhile, energy stocks lost 0.7%, despite rising oil prices on the day.
European stocks jumped on Wednesday, marking their strongest single-day rally in over four years following news of the Middle East ceasefire.
The announcement temporarily calmed investor concerns, allowing the STOXX 600 to recover some losses accumulated since hostilities erupted in late February.
Among other movers, Sodexo slumped 20% after the French food caterer slashed its annual sales and profitability targets.
Looking ahead, market participants will closely scrutinise US inflation data, due later in the day, for insights into how the ongoing conflict might be affecting economic fundamentals.
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