European stock markets posted modest gains on Friday as investors weighed reports of diplomatic progress between the United States and Iran against lingering uncertainty over a final agreement.
By 07:13 GMT, the FTSE 100 was up 0.09%, while Germany’s DAX gained 0.16% and France’s CAC 40 advanced 0.45%.
Sterling slipped 0.09% against the US dollar, trading at $1.3434 as cautious sentiment weighed on the pound.
Reports suggested US and Iranian negotiators had drafted a proposal for a 60-day ceasefire extension that would reopen the Strait of Hormuz and open the door to formal nuclear talks.
However, markets remained unsettled after reports indicated President Donald Trump had not yet approved the proposal and was still considering its terms before making a final decision.
Speaking on Thursday, Vice President JD Vance acknowledged that negotiators were still working through outstanding issues, saying they were “going back and forth on a couple of language points.”
Vance added that it was “still to be discussed” whether Trump would sign the agreement, stating “we’re not there yet, but we’re very close.”
Tensions in the region remained elevated after US Central Command said Iran launched a ballistic missile towards Kuwait on Wednesday night, describing it as an “egregious ceasefire violation.”
Kuwaiti defence systems intercepted the missile, while regional governments including Saudi Arabia, Qatar and Egypt, along with the Organisation of Islamic Cooperation, condemned the launch.
US forces also reportedly targeted an Iranian ground control facility near Bandar Abbas and intercepted attack drones said to threaten commercial shipping through the Strait of Hormuz.
Political divisions within Iran added further uncertainty, with one lawmaker claiming the draft agreement differed substantially from proposals prepared under Supreme Leader Ayatollah Ali Khamenei’s supervision.
Iranian officials also reiterated that the country would not export its enriched uranium stockpile and continued to advocate long-term control of the Strait of Hormuz as a strategic objective.
Iran’s Tasnim News Agency reported that no memorandum of understanding had been finalised, directly contradicting suggestions that a deal was close to completion.
Treasury Secretary Scott Bessent announced new sanctions targeting Iran’s Persian Gulf Strait Authority as part of what he called an “Economic Fury” campaign against Tehran.
Bessent warned companies and governments against paying transit fees linked to the Strait of Hormuz and said Iranian oil exports had fallen sharply, adding that military options remained on the table.
Diplomatic efforts continued, with US officials scheduled to meet representatives from Pakistan and Oman, both of which have played significant roles in mediation between the two sides.
Reports suggested the proposed framework could include phased sanctions relief and limited access to frozen Iranian assets, though several key issues remained unresolved heading into the weekend.