European stocks slip as Iran tensions and weak PMIs weigh

European equities declined on Thursday as risk sentiment soured amid escalating geopolitical tensions and a batch of weak economic data. The French PMI report was particularly poor, reinforcing stagflation concerns as the euro area enters the second quarter. Meanwhile, US-Iran talks remain a key focus, with Iran defending its nuclear position, adding to uncertainty.

The disappointing PMI readings from the euro area and the UK underscore a sluggish economic backdrop, which complicates the European Central Bank's policy path. The ECB is widely expected to signal a rate hike in June, but weak growth and persistent inflation create a stagflationary dilemma. For currency traders, this divergence between a hawkish ECB and a deteriorating economy could weigh on the euro, as rate hike expectations may be tempered by growth concerns. Check NowPrice's forex page for the latest EUR/USD pricing and real-time updates on cross rates.

Looking ahead, markets will monitor any further developments in US-Iran negotiations and the Pakistani army chief's visit to Iran, which briefly lifted sentiment on Thursday. Next week's euro area inflation data will be crucial for the ECB's June decision. Traders should also watch for any shifts in risk appetite, as geopolitical headlines could drive safe-haven flows into the dollar and yen.