European shares end flat, set for weekly loss as oil rises on Iran tensions

European shares traded flat on Friday, with the regional benchmark index on track for a weekly loss, as geopolitical risks in the Middle East lifted crude prices and tempered risk appetite.

The pan-European STOXX 600 index was down 0.1% by midday, leaving it set for a 0.3% weekly decline, its first in three weeks. Energy shares led gains, rising 0.7% as Brent crude futures approached $80 per barrel, driven by escalating tensions between Israel and Iran.

The rise in oil prices weighed on broader market sentiment, with most sectors trading lower. Financials fell 0.4%, while consumer staples declined 0.3%. Technology stocks were among the weakest performers, down 0.5%, as investors remained cautious ahead of the weekend.

The European Central Bank's recent policy stance also contributed to the subdued trading environment. ECB officials have signaled a cautious approach to interest rate cuts, citing persistent inflation concerns. This has kept borrowing costs elevated, limiting support for risk assets.

The euro was little changed against the dollar, trading near $1.0850. U.S. Treasury yields were flat, with the 10-year note yielding around 4.20%, reflecting a steady outlook for global fixed-income markets.

Analysts noted that the market's focus remained on geopolitical developments in the Middle East, which could continue to influence oil prices and investor sentiment in the near term. The weekly loss for European shares underscored the sensitivity of risk assets to external shocks, particularly in the energy sector.