European stock markets retreated from their record highs, with pressure coming from energy producers as oil prices declined.

The Stoxx Europe 600 index closed down 0.3% on Thursday, halting a five-session winning streak. A temporary peace agreement between the US and Iran pushed Brent crude below $78 a barrel, with shares of Shell, BP, and TotalEnergies all falling more than 2.5%.

Weakness in IT services also dragged on the market, with Capgemini shares dropping 9% after Accenture forecast that AI-related disruptions and the US-Iran conflict would lead to a decline in its own revenue.

Prior to Thursday's pullback, the European benchmark had risen for several consecutive days, driven by growing market optimism that lower energy prices would boost the economy and help curb inflation.

The UK's FTSE 100 fell 1%, weighed down by mining and housebuilding stocks. The Bank of England kept its main policy rate unchanged as expected, although two policymakers voted for an immediate 25-basis-point hike due to concerns about persistent inflation. The central bank noted that the recent drop in oil prices was "encouraging."

"The market excitement and relief from the US-Iran deal earlier this week has faded somewhat following the latest round of central bank meetings," said Dan Coatsworth, a market director at AJ Bell.

In individual stock moves, London Stock Exchange Group shares fell 7% after Rothschild & Co. Redburn downgraded the stock from 'buy' to 'neutral'.

French employee benefits firm Edenred SE surged 17% after the company said it had been approached by investment funds, following reports of acquisition interest from BC Partners.