European Stocks Rebound as Oil Prices Retreat, Middle East Tensions Linger

European stock markets rebounded last week, snapping a three-week losing streak as oil prices retreated. The pan-European STOXX 600 index closed 0.4% higher on Friday and added to its weekly gain of 0.5%. This was the index's biggest weekly gain since early August.

The previous three weeks had seen the index lose around 3%, but investors remained cautious about developments in the Middle East, where truce hopes outweighed Houthi attacks on Saudi Arabia. Negotiators are exploring a phased path out of war that would involve Tehran reopening the Strait of Hormuz and Washington lifting its economic blockade of Iran.

Energy shares fell 1.3% and were the biggest sectoral losers, but airline stocks advanced as oil prices retreated. The travel and leisure index rose 0.8%, with Ryanair and Lufthansa gaining more than 2% each.

The biggest boost came from heavyweight banks, which were the top gainers, up 1.3%. Shares of banking major UBS rose 3.5% after a report said the bank had revived discussions to exit Switzerland.