European stock markets made modest gains in early trade Friday, yet investor sentiment remained fragile as violence in the Middle East persisted and traders prepared for a key U.S. labor-market release later in the day.
At 03:05 ET (08:05 GMT), Germany's DAX was up 0.7%, France's CAC 40 advanced 0.3% and the U.K.'s FTSE 100 gained 0.2%. Despite those upward moves, the main continental indices were positioned to record weekly losses of roughly 5% - the steepest weekly downturn since last April.
Geopolitical tensions drive market caution
Equity markets have been volatile through the week as investors try to gauge the duration and economic consequences of the Middle East conflict. Now in its seventh day, the confrontation has shown no sign of abating.
The conflict has escalated across multiple fronts. U.S. Secretary of Defense Pete Hegseth said late Thursday that "the amount of firepower over Iran and over Tehran is about to surge dramatically." Earlier on Friday, Israel announced it had commenced a "broad-scale" wave of strikes targeting infrastructure in Tehran.
In response, Iran has launched strikes that have reached Israel and extended to nearby regions, with reported targets in the Gulf states, Cyprus, Turkey and Azerbaijan, broadening the geographic footprint of the hostilities.
U.S. President Donald Trump, in a telephone interview with Reuters, said the United States must have a role in determining the next leader of Iran after airstrikes killed Supreme Leader Ayatollah Ali Khamenei last week. The piece also noted Mojtaba Khamenei, the late supreme leader's son, has emerged as a frontrunner to succeed him, indicating the Iranian leadership may not be yielding to immediate external pressure.
Economic data in focus
Aside from geopolitical developments, investors were also watching scheduled macro releases. Eurozone gross domestic product data for the final quarter of last year were expected to show quarterly expansion of 0.3% and annual growth of 1.3%.
Yet the primary market focus was likely to be the U.S. monthly nonfarm payrolls report, due later in the session. Consensus expectations called for an increase of 59,000 jobs in February, down from a 130,000 gain in January, while the unemployment rate was forecast to remain at 4.3%.
Corporate results show a mixed earnings picture
Friday also brought more corporate earnings, with the quarterly reporting season winding down. Results across a range of companies underlined divergent pressures in different sectors.
Deutsche Lufthansa (ETR:LHAG) recorded a record level of annual revenue for 2025 but reported a slim operating margin. The German carrier said it barely broke even on an operating basis and declined to provide quantified profit guidance for 2026, citing uncertainty related to the situation in the Middle East.
British fluid and motion control group IMI (LON:IMI) announced a £500 million share buyback after delivering a fifth consecutive year of mid-single-digit organic revenue growth, a signal of management confidence in cash returns to shareholders.
Swiss semiconductor technology company Comet Holding (SIX:COTNE) cut its dividend by two-thirds after free cash flow plunged by 80% in 2025. The company attributed the drop to a weaker dollar and an unfavorable product mix that compressed margins, despite posting modest sales growth.
French digital services firm Spie (EPA:SPIE) reported record annual profit as its 2025 revenue exceeded the €10 billion milestone for the first time.
Oil rallies amid supply concerns
Oil prices steadied on Friday but were set for substantial weekly gains as the intensifying conflict stoked fears of disruptions to global supply. Brent futures were trading 0.3% higher at $85.68 a barrel, while U.S. West Texas Intermediate (WTI) futures rose 0.1% to $81.06 a barrel.
Since the start of the hostilities four trading sessions earlier, Brent had climbed about 18% and WTI about 21%.
In an effort to alleviate some supply worries, the United States said it would permit the sale of Russian oil to India for a 30-day period. Market participants nonetheless remained concerned that the conflict could lead to a closure of the Strait of Hormuz, a narrow chokepoint between Iran and Oman that handles roughly 20% of global oil shipments.
With geopolitical volatility persisting and major economic data imminent, markets entered the weekend with elevated uncertainty. Traders and portfolio managers were positioned for the potential for further swings in commodity and equity markets as events in the Middle East and the forthcoming U.S. employment numbers shape near-term risk sentiment.