EU Stocks Rally as Oil Prices Ebb, Middle East Tensions Linger

European stocks are poised to end their three-week losing streak on Friday as oil prices retreat. The pan-European STOXX 600 rose by 0.6% to 640.43 points, putting it on track for a nearly 1% weekly gain. The index had lost around 3% in the previous three weeks.

The decline in oil prices outweighed Houthi attacks on Saudi Arabia, with hopes of a truce between Tehran and Washington potentially leading to the reopening of the Strait of Hormuz and the lifting of economic sanctions on Iran.

However, analysts caution that there is still uncertainty surrounding the situation. Daniela Hathorn, senior market analyst at Capital.com, said: 'Even though the conflict in the Middle East seems like it's potentially reaching a positive phase of dialogue and agreement, there's still a lot of uncertainty because we've been here before.'

The energy sector was among the biggest losers, falling 0.7%, while airline stocks rose as oil prices remained near $100 a barrel.