European shares rise as corporate earnings take center stage

European shares inched higher on Tuesday as investors weighed a busy slate of corporate earnings, while keeping an eye on the Middle East after conflicting signals from the United States and Iran over efforts to end their five-month-old war.

The pan-European STOXX 600 index .STOXX was up 0.6% at 656.27 by 0710 GMT.

Energy stocks .SXEP inched up 0.1% as oil prices rebounded 1% after a sharp selloff in the previous session. Concerns persisted that Middle Eastern supply could remain vulnerable, with a diplomatic breakthrough in the U.S.-Iran conflict — which has disrupted oil shipments — still appearing elusive. O/R

Markets have repeatedly swung between optimism and pessimism since the conflict began in late February, as both sides have struggled to reach a mutually acceptable resolution. The European benchmark has gained over 5% since the start of the conflict, recovering from lows hit in March.

Travel and leisure stocks .SXTP fell 0.4%, reflecting renewed concerns over elevated fuel costs.

The European earnings season was in full swing, with investors parsing company updates for clues on the region's business outlook.

Shares of Lufthansa LHAG.DE dropped 9% after the German airline on Tuesday set a range for its 2026 adjusted operating profit, after that figure more than halved in the second quarter due to higher fuel costs tied to the U.S.-Iran war.

Zalando ZALG.DE fell 13.2% after the retailer forecast 2026 revenue and growth to land in the lower half of its previously guided range and narrowed its adjusted operating profit outlook.

Shares in Bayer BAYGn.DE rose 3.7% after the German pharmaceuticals group reported an unexpected 1.9% increase in quarterly operating profit.

-Reporting by Tharuniyaa Lakshmi in Bengaluru; Editing by Mrigank Dhaniwala/Reuters