Germany's blue-chip DAX index was downbeat on Thursday, closing 0.34% lower, as a fresh exchange of strikes threatens to derail US-Iran ceasefire talks.
Reuters reported, citing an unnamed US official, that the US military launched defensive strikes in Bandar Abbas, Iran, shooting down four Iranian drones and targeting a ground control station. In response, Iran's Revolutionary Guard claimed it targeted the US air base responsible for the attack.
Meanwhile, Washington and Tehran have yet to resolve critical impasses in negotiations, with US President Donald Trump saying he is "not satisfied" with the current terms. The White House also refuted the unofficial draft released by Iranian state TV, saying it was a "complete fabrication."
The rising tensions lifted German defense stocks, including arms maker Rheinmetall (RHM.F), military and civilian propulsion systems group Renk Group (R3NK.F) and defense technology company Hensoldt (HAG.F), which gained 4.15%, 5.44% and 5.88%, respectively, on Xetra.
Rheinmetall shares received an additional boost after securing a 1.02 billion-euro order for over 2,000 military transport vehicles for the German armed forces, or Bundeswehr. The order falls under a framework contract signed in 2024 for up to 6,500 vehicles.
In other corporate updates, Bayer (BAYN.F) is facing a lawsuit from US seed company Latham Quality, which alleges the German life sciences company monopolized the genetically engineered corn seed market through anti-competitive pricing and blocking generic competitors. The plaintiff is seeking damages and an injunction to restore market competition.
In an emailed statement to, Bayer said the claims "lack merit," and intends to answer the allegations in court, adding that the crop input and corn seed markets are "competitive, fair and diverse." The stock was down 0.73% at the close.
On the economic side, the euro area economic sentiment indicator edged up to 93.5 in May from a revised 93.2 a month earlier, according to the European Commission's monthly survey. Meanwhile, the final consumer confidence index stood at -19 points, confirming the flash estimate and against the -20.6 points previously.