May 29 (Reuters) - European shares rose on Friday and were on track to end the month higher, as investors took comfort from expectations that a proposed deal to extend the Middle East ceasefire and restore shipping through the Strait of Hormuz could be finalised.
The agreement was yet to be approved by U.S. President Donald Trump, sources said, and did not address more complex issues such as Iran's nuclear programme.
The pan-European STOXX 600 was up 0.3% at 626.91 points, as of 0715 GMT, and poised
to end the week higher.
The benchmark index had come within striking distance of record highs earlier this week and is on course for a second consecutive monthly gain, but escalating tensions in the Middle East capped further advances.
Prices of crude oil, a key resource for energy-deficient Europe, slipped and were on track for their first weekly drop in two months.
Elevated energy prices, however, have begun feeding through to consumers, as a preliminary estimate from France showed inflation accelerated in May from the previous month. Inflation readings from Germany and Italy are due later in the day.
Defence stocks were among top sectoral gains with a 1.4% climb. Tensions were high between Russia and Ukraine, and NATO member Romania said a drone injured two people in a southeastern city during an overnight Russian attack on Kyiv.
Defence stocks tend to rise when geopolitical tensions escalate, as investors anticipate stronger near-term demand for military equipment and services.
Among top movers, CTS Eventim jumped 11% after the German ticket firm said its revenue grew by 23% in the first quarter of 2026, driven by strong demand for live entertainment.
(Reporting by Johann M Cherian in Bengaluru; Editing by Sherry Jacob-Phillips)
