Oil Price Retreat Lifts European Stocks Out of Three-Week Slump

European stocks are on track to end a three-week losing streak as oil prices retreat. The pan-European STOXX 600 index rose 0.6% to 640.43 points by 0821 GMT, putting it in line for a nearly 1% weekly gain.

The benchmark had lost around 3% over the previous three weeks. Oil prices fell as hopes of a truce between Iran and Saudi Arabia outweighed Houthi attacks on the latter. 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.

'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,' said Daniela Hathorn, a senior market analyst at Capital.com. Energy shares fell 0.7% and were the biggest sectoral losers.

By contrast, oil-price-sensitive airline stocks advanced, with Ryanair and Lufthansa gaining more than 2% each. The travel and leisure index rose 1.2%. Basic resource shares also rose by 1.14%, on gains in Pan African Resources and Glencore PLC. UBS upgraded its rating on Glencore to 'buy' from 'neutral'. However, Hathorn warned that further tightening by the European Central Bank could prove damaging for the economy as growth isn't in the best position in the eurozone.