European shares inched lower on Thursday as investors weighed lingering tensions in the Middle East and awaited the highly anticipated talks between the US and China.
The pan-European STOXX 600 was down 0.4% at 637.56 points by 0710 GMT. Most regional bourses also traded lower.
Investor sentiment remained cautious as geopolitical tensions in the Middle East kept energy markets volatile. Iranian officials communicated with US envoys at the UN General Assembly, but both sides signalled little progress toward ending the conflict.
Oil prices edged higher as traders reassessed supply risks linked to the Middle East conflict, with Brent crude futures holding above the key $100-per-barrel level.
European energy shares gained 0.3%, while aerospace and defence stocks led sectoral declines, weighed down by Saab and Hensoldt.
A summit between US President Donald Trump and Chinese President Xi Jinping is also in focus, with hopes for progress on trade relations.
Among individual stocks, Shelly Group gained 6.2% after Schneider said it intends to launch a €1.2 billion ($1.4 billion) takeover bid for the Bulgarian smart-device maker.
Shares in H&M fell 2.5% even after the Swedish fashion retailer reported a bigger-than-expected rise in June-August operating profit.
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