European equities ease as investors await Mideast peace updates

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May 21 (Reuters) - European shares dipped on Thursday, as investors remained cautious while awaiting further developments in U.S.-Iran peace talks.

Iran said it was reviewing Washington's latest response to end the war, while U.S. President Donald Trump said he was prepared to wait to "get the right answers" from Tehran, but attacks would renew if no deal was reached.

The pan-European STOXX 600 .STOXX was down 0.2% at 618.79 points, as of 0701 GMT, after ending up 1.5% higher on Wednesday near two-week highs.

European equities have been unable to bounce back to pre-war levels as the region's dependence on oil imports and small AI tech exposure has held it back, while global shares have rallied.

Sources told Reuters that the case for a European Central Bank rate hike in June was nearly sealed, but the bank is likely to be noncommittal about a further move.

Money markets currently price in more than two rate hikes from the ECB before year-end.

Among early movers, EasyJet EZJ.L dropped 1.8% after the British budget airline posted a first-half loss, and said its full-year outlook remains uncertain amid the Iran war.

-Twesha Dikshit/Reuters