Most European indices end lower as Middle East news stirs market swings

European markets closed with most benchmarks in negative territory at the end of the session. Spain's Ibex managed a gain, while France's CAC posted the steepest decline.

• Germany's DAX dipped 13.02 points, or 0.05%, to 25,306.76.

• France's CAC fell 29.56 points, or 0.38%, to 7,838.50.

• UK's FTSE 100 declined 31.71 points, or 0.29%, to 10,732.99.

• Spain's Ibex rose 53.10 points, or 0.28%, to 19,092.39.

• Italy's FTSE MIB slipped 14.92 points, or 0.03%, to 49,071.36.

Traders remained on edge because of Middle East developments.

The primary driver of the volatility was the status of US–Iran talks.

Earlier optimism followed an Al Araby Al Jadeed report that Qatar and Pakistan had presented a compromise proposal involving confidential IAEA visits to Iranian nuclear facilities and the release of $6 billion in interest on frozen Iranian funds. The proposal reportedly had US approval and some prior Iranian support, though outstanding differences remained and official confirmation was still needed.

The news triggered a sharp market response. December crude oil, which had traded as high as $101.37, dropped to $95.25. US Treasury yields moved lower, stocks received a lift, and the dollar came under pressure.

However, a subsequent report that talks were continuing but that expectations of an imminent deal were misplaced took some of the optimism out of the market. Oil rebounded above $97, Treasury yields recovered from their lows, and the dollar clawed back some of its losses.

Separately, Reuters reported that senior Iranian officials described Tehran as deliberately prolonging negotiations, underscoring the obstacles to a quick agreement.

For traders, the distinction matters. Continuing negotiations and reaching an agreement are two different milestones. Prices are reacting to changing probabilities, and each new headline can quickly reverse the previous move.

The GBPUSD provided a good example. Earlier dollar selling pushed the pair above its 100-day moving average at 1.33874. As the optimism faded, the price moved back below that level, bringing last week's high near 1.3370 back into focus. The headline provided the shove. The technical levels helped measure whether buyers could sustain it.

European yields moved lower

European benchmark 10-year yields were lower across the board:

• Germany: 3.397%, down 6.6 basis points.

• France: 4.921%, down 1.8 basis points.

• UK: 5.408%, down 4.2 basis points.

• Spain: 4.028%, down 6.8 basis points.

• Italy: 4.526%, down 6.4 basis points.

European data present an uncomfortable mix

German producer prices rose 1.9% month over month, above the 1.5% estimate and 1.1% previously.

At the same time, confidence weakened. Germany's ZEW economic sentiment index fell to 28.1, versus 30.2 expected and 34.7 previously. The broader eurozone measure declined to 18.5, below the 23.6 estimate and 25.8 prior reading.

Higher producer prices alongside weaker sentiment create an uncomfortable mix: more inflation pressure at the factory gate, with less confidence in the outlook.

US stocks: Dow leads as tech gains fade

At the supplied market snapshot, US stocks were mixed:

• Dow industrial average: up 479.05 points, or 0.92%, at 52,450.23.

• S&P 500: up 23.33 points, or 0.30%, at 7,714.06.

• Nasdaq Composite: up 15.30 points, or 0.06%, at 26,446.19.

• Russell 2000: up 45.81 points, or 1.68%, at 2,774.11.

• Nasdaq 100: down 8.79 points, or 0.03%, at 29,520.55.

The Nasdaq Composite had earlier reached 26,601, highlighting how much of the headline-driven advance had faded. Small caps and the Dow were showing considerably more strength.

US housing disappoints; Treasury curve flattens

US housing starts came in at 1.22 million, below 1.30 million expected. Pending home sales fell 7.3% month over month, much weaker than the 0.6% decline forecast. Building permits were slightly above expectations at 1.40 million, while ADP weekly employment increased 18,500, versus 26,000 previously.

Treasury yields showed longer maturities leading the decline:

• 2-year: 4.770%, up 0.9 basis point.

• 5-year: 4.918%, down 1.1 basis points.

• 10-year: 5.106%, down 3.0 basis points.

• 30-year: 5.429%, down 4.4 basis points.

Oil rebounds; silver and bitcoin advance

December crude oil was near $97.49, down 1.07%, but well above its $95.25 low. Gold was near $4,132, down about 0.2%, while silver rose 1.20% to $57.75. Bitcoin traded near $82,346, up 0.62%.

The next Middle East headline remains a potential catalyst. Traders have already seen how quickly optimism can build—and how quickly the price action can take some of it back. Stay on your toes.