BRUSSELS/FRANKFURT/PARIS (dpa-AFX) - European stocks are seen opening mixed on Wednesday after two days of sharp losses on concerns about the Middle East crisis' impact on inflation and interest rates.
Brent crude futures topped $83 a barrel as the U.S. and Israeli strikes on Iranian targets coupled with retaliatory attacks by Tehran posed threats to energy infrastructure and commercial shipping in the Gulf.
The conflict widened on Tuesday, with Israel hitting targets in Lebanon, while Iran stepped up missile and drone attacks in the region, targeting Israel, Saudi Arabia, the United Arab Emirates, Oman and Bahrain.
Iraq - OPEC's second-largest producer after Saudi Arabia - has cut output by nearly 1.5 million barrels per day, citing export bottlenecks and storage constraints.
Saudi Arabia is also scrambling to shield exports. Qatar has declared force majeure on deliveries following a halt in production in the wake of an Iranian drone strike.
As the conflict threatens global fuel trade, U.S. President Donald Trump said the U.S. Navy 'will begin escorting' oil tankers through the Strait of Hormuz, a strategic waterway, if necessary.
Trump also said he had instructed officials to provide political risk insurance and financial guarantees at a reasonable cost to secure maritime trade passing through the Gulf, particularly energy shipments.
After signaling a prolonged campaign, Trump claimed that the stockpile of ammunition needed for military operations against Iran is at an all-time high.
In economic releases, reports on U.S. private sector employment and service sector activity may garner investor attention later in the day as rate cut expectations fade.
Minneapolis Fed President Neel Kashkari said on Tuesday it is too soon to assess the inflationary impact of the Middle East conflict.
New York Fed President John Williams didn't address the impact of the Iran conflict on the economy and monetary policy.
Kansas City Fed President Jeff Schmid said that inflation remains too high and that policymakers have little room for complacency.
Closer home, services PMI data for eurozone, Germany, France and U.K. along with the release of EU unemployment data will be in the spotlight.
Asian markets traded lower for a third day running, with South Korea's Kospi falling nearly 10 percent and Japan's Nikkei average tumbling 4 percent, as the conflict in the Middle East continued to fuel uncertainty.
The dollar surged to a three-month peak while gold rose more than 1 percent after drifting lower in the previous session, weighed by a stronger dollar and dimming prospects for Federal Reserve rate cuts.
Overnight, U.S. stocks trimmed early losses but still ended notably lower as Israel and the U.S. pounded Iran and Tehran pressed ahead with retaliatory attacks, raising concerns the Middle East conflict could disrupt global trade and reignite inflationary pressures.
As oil prices surge to their highest levels in over a year, President Trump stressed that the United States would ensure the 'free flow of energy to the world' under any circumstances.
The Dow closed 0.8 percent lower at a one-month low after having plummeted by more than 1,200 points to its lowest intraday level in almost three months in intraday trading. The tech-heavy Nasdaq Composite shed 1 percent and the S&P 500 gave up 0.9 percent.
European stocks ended with sharp losses to hit multi-month lows on Tuesday as the Middle East conflict widened, and data showed Eurozone inflation unexpectedly rose in February.
The pan European Stoxx 600 slumped 3.1 percent. The German DAX plummeted 3.4 percent, France's CAC 40 plunged 3.5 percent and the U.K.'s FTSE 100 tumbled 2.8 percent.
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