European stocks tick lower as mining losses weigh

European shares closed 0.2% lower on Friday, tracking a decline in mining stocks and metals prices, amidst ongoing uncertainty in the Middle East conflict.

European shares ‌inched ​lower on Friday as mining stocks tracked a fall in metals prices and investors remained cautious after U.S.-Iran negotiations to end the Middle East conflict stalled. The pan-European STOXX 600 ‌index closed 0.2% lower, still managing to eke out a 0.4% weekly gain after hitting record highs earlier in the week. Risk sentiment remained shaky as U.S.-Iran talks in Switzerland planned for Friday were cancelled as fighting flared in Lebanon, creating fresh uncertainty. However, ‌Israel and Hezbollah later agreed to a ceasefire in Lebanon. An uptick in oil prices on Friday sent travel and ‌leisure stocks down 0.9%, while energy stocks climbed 1.3%. Mining stocks led losses as commodities prices eased, declining 2.1%. London-listed miners Antofagasta and Pan African Resources were among the worst hit.

The pan-European STOXX 600 had rallied to a record high earlier this week, driven by signs of progress in the U.S.-Iran peace talks ⁠and ​a gradual reopening of the ⁠Strait of Hormuz, a vital artery for global energy supplies.

"The reopening is only partially reflected in EU equities rotations and breadth, as investors await deal ⁠execution," Morgan Stanley analysts said in a note, while downgrading energy stocks to "equal weight" from "overweight". Equities in Europe have been under pressure since the ​war began due to the inflationary impact of surging oil prices, but sentiment is yet to recover fully due ⁠to the frailty of the peace negotiations. Meanwhile, data showed German producer prices rose less than expected in May, up 2.2% on the year, a relief ⁠for ​investors worried about high energy costs feeding inflation. The European Central Bank last week raised interest rates for the first time in nearly three years, but policymakers expect a pause at their next meeting in July as the more likely ⁠scenario. Chip-equipment maker ASML said it had never shipped an extreme ultraviolet lithography machine to China, after a report that U.S. officials ⁠were concerned one of ⁠the company's most advanced tools may have reached the country. Its shares ended 1.1% lower. Netherlands-based hotel group PPHE dropped 15.8% after the company said a £920.9 million ($1.2 billion) takeover proposal from Israel's Fattal Hotel ‌Group has fallen ‌through.