Oil Prices Fuel European Shares Decline as US-Iran Talks Stall

European shares declined on Thursday as oil prices continued their upward trend, driven by faltering US-Iran negotiations. The pan-European STOXX 600 slipped 0.59% to 636.15 points by 0817 GMT, with most regional bourses trading in negative territory.

Iranian officials communicated with US envoys on the sidelines of the UN General Assembly, but both sides signaled little progress toward ending the conflict. Oil prices rose for a second day after falling for five sessions, with Brent crude holding above the key $100-per-barrel level.

European energy shares were among the top gainers, up 0.84%, while Germany's 10-year government bond yield remained steady at 3.547%, just below a 17-year high reached last week as elevated oil prices strengthened the case for further monetary tightening from the European Central Bank.

Investors are looking to the Washington summit between US President Donald Trump and Chinese President Xi Jinping for some progress on issues such as Taiwan, Iran, and concerns over AI. The two leaders are expected to speak on a raft of issues, including trade, with the US Treasury Secretary Scott Bessent saying the two countries had agreed to extend their trade truce to January 10.