European equities marked their first decline in three sessions, as upward pressure from oil prices and government bond yields outweighed the boost from better-than-expected economic activity figures. The Stoxx Europe 600 Index closed 0.4% lower, with energy stocks outperforming while automobile and insurance sectors were among the worst performers.

Brent crude climbed above the $100-per-barrel threshold, set to snap a five-day losing streak, and helped push European government bond yields higher. The global benchmark oil price had slipped earlier in the day after U.S. President Donald Trump signaled optimism regarding talks between American and Iranian representatives.

Data released earlier showed the eurozone private sector expanded at its fastest pace in over three years, driven by an unexpected improvement in services activity. The composite PMI compiled by S&P Global rose to 53.1 in September, whereas economists surveyed by Bloomberg had predicted a slowdown in growth.

The combination of firmer energy costs and rising yields created a headwind for risk assets, even as the solid PMI reading pointed to resilient economic momentum. Market participants now weigh the implications of sustained inflation pressures against a backdrop of improving business conditions.

Traders are closely monitoring geopolitical developments, while central bank policy expectations remain a key driver. With crude holding above the psychologically significant $100 mark, equities may stay sensitive to further moves in commodity markets in the near term.