European stock markets closed lower on Friday following news that Iran had postponed talks with the United States concerning a lasting peace agreement, leaving the market directionless for a period.

The Stoxx Europe 600 index ended the session down 0.2%, after having risen as much as 0.2% earlier in the day. Mining, retail, and consumer stocks were among the hardest hit, while energy and media sectors outperformed. Novo-Nordisk A/S shares surged 4.6% after receiving a ratings upgrade from a brokerage firm.

UK markets also declined after Andy Burnham, the Mayor of Greater Manchester, secured a decisive victory in a by-election, paving a path for him to challenge Keir Starmer for the Prime Minister's position.

European equities had reached new highs earlier in the week on signs of progress toward a Middle East peace deal; surveys indicated this had prompted some strategists to raise their year-end targets.

US President Donald Trump and Iran's President had previously signed a memorandum of understanding, with talks on a lasting peace agreement originally scheduled to begin Friday in Switzerland. The prospects for these talks were cast into doubt due to fighting in southern Lebanon. Reports indicated that Israel and Hezbollah had agreed to a ceasefire starting at 4 p.m. local time on Friday.

"Of course, with Trump, things can always deviate during the process, but we believe we are entering a new phase of de-escalation and lower oil prices," said Alexandre Drabowicz, Chief Investment Officer at Indosuez Wealth Management.

ASML Holding NV shares fell 1.1%.

US markets were closed for the Juneteenth holiday.