April 16 (Reuters) - European shares were little changed on Thursday as markets weighed progress toward a potential resolution to the Middle East conflict, while investors assessed a fresh batch of corporate earnings.
The pan-European STOXX 600 index ended flat at 616.95 points. Regional bourses were mixed, with Germany's DAX and London's FTSE 100 adding about 0.3% each.
The German government halved its 2026 growth forecast and cut its 2027 growth prediction, while raising inflation projections amid soaring oil prices, a source told Reuters.
Optimism grew that the Iran war could be close to ending, although Tehran warned that the fate of its nuclear program remained unresolved.
The STOXX 600 was close to recouping all the losses it has incurred since the conflict. Still, concerns have lingered over how sustained increases in oil prices could weigh on European economies, which rely heavily on imported energy.
"For Europe, the stock market is not necessarily a reflection of the broader economy which is much more influenced by industries that tend to be negatively affected by rising energy prices," said Stephan Kemper, BNP Paribas Wealth Management's chief investment strategist.
"The longer it takes, the more the market will realise that we are way beyond the point where we just have to think about whether the Strait (of Hormuz) is open or not, but how much is the damage that already has been done and to what extent will this derail the policy growth scenario that the market is to play."
With the European corporate earnings season in full swing, investors looked for crucial insights into the impact of the ongoing geopolitical uncertainties.
Among sectors, technology and energy boosted the index, rising 1.5% and 0.7%, respectively.
Software companies gained with Germany's SAP adding 3.5%, while Dassault Systemes and Capgemini were up over 2.5%.
On the downside, financial shares weighed heavily on the benchmark index, dropping 1%. Defence stocks slid 1.8% with Safran and Rolls-Royce falling 3.4% and 2.4%, respectively.
The travel and leisure sector was also under pressure with Ryanair dropping 6.4%. Germany's Lufthansa became the first major carrier to ground planes due to high jet fuel costs, while Britain's easyJet said its bookings were lagging last year's. Both were down 3.4% and 5%, respectively.
In individual stock movements, Barry Callebaut plunged 15.6% after the Swiss chocolate manufacturer lowered its full-year operating profit outlook.
Meanwhile, betting group Entain gained 6% after its first-quarter net gaming revenue rose 3%.
Intertek jumped 9% after the product testing company rejected a buyout proposal from Swedish equity firm EQT AB, saying the 51.5 pound per share bid undervalued it.
(Reporting by Ragini Mathur and Twesha Dikshit in Bengaluru; Editing by Varun H K and Shailesh Kuber)
By Ragini Mathur and Twesha Dikshit
