BRUSSELS/FRANKFURT/PARIS (dpa-AFX) - European stocks closed lower on Tuesday as hopes for a quick U.S.-Iran peace deal faded following the U.S. military launching some strikes against Iranian targets. Concerns about possible rate hike moves by the European Central Bank weighed as well on sentiment.
The U.S. conducted 'self-defense strikes' on Iranian missile launch sites and boats near the Strait of Hormuz, clouding the outlook for an interim deal between Washington and Tehran.
Defense forces across the Gulf are on high alert as Iran pressed ahead with waves of missile and drone attacks on the UAE, Kuwait and Bahrain.
Meanwhile, Israeli military has begun a wave of strikes against Hezbollah in the Bekaa Vally in the east of Lebanon and other parts of the country following an announcement by Prime Minister Benjamin Netanyahu that his country will intensify its attacks on Hezbollah.
The ECB should raise interest rates in June even if there's a quick resolution to the Middle East conflict, ECB Executive Board member Isabel Schnabel said today.
'Even if the war ended today, a lot of damage has already been done to energy infrastructure and global supply chains,' she said in an interview published on the ECB's website.
The Pan European Stoxx 600 ended down by 0.57%. Germany's DAX and France's CAC 40 fell 0.8% and 1.03%, respectively. The UK market, which returned to trading after an extended weekend, settled higher, with FTSE 100 gaining 0.24%. Switzerland's SMI ended 0.17% up.
Among other markets in Europe, Austria, Belgium, Ireland, Netherlands, Poland, Portugal, Russia, Spain, Sweden and Türkiye closed weak.
Czech Republic, Finland, Greece, Iceland and Norway ended higher, while Denmark closed flat.
In the UK market, miners and banks moved higher. Stocks from the realty sector too found good support.
Metlen Energy & Metals surged 6.5%. JD Sports Fashion climbed 4.7%, while IAG, Antofagasta, Endeavour Mining, Polar Capital Technology Trust, Glencore, Burberry Group, Lion Finance, Natwest Group, Convatec Group and Anglo American Plc gained 2%-4%.
Melrose Industries fell 5.38%. BP, AutoTrader Group, RightMove, Compass Group, Tesco, LSEG, Diageo, Weir Group, BT Group, Bunzl and British American Tobacco also ended notably lower.
In the German market, MTU Aero Engines fell nearly 4%. Deutsche Bank, SAP, Scout24, Fresenius, Commerzbank, Gea Group, Bayer, Siemens, Siemens Healthineers, Deutsche Telekom, Beiersdorf, Merck and Deutsche Boerse lost 1%-2.3%.
Zalando moved up 3%. Infineon, E.ON, Continental and Mercedes-Benz also closed higher.
In the French market, Teleperformance tanked 11%. Carrefour and Credit Agricole both shed more than 6%. Bureau Veritas, Michelin, Hermes International, Kering, Safran, Eurofins Scientific, Publicis Groupe, Pernod Ricard, LVMH and EssilorLuxottica also ended sharply lower.
STMicroelectronics moved up nearly 5%. Stellantis, TotalEnergies, Engie and Edenred posted moderate gains.
In economic news, data released by British Retail Consortium showed UK shop price inflation increased 1.2% year-on-year in May, up from 1.0% in April, which had marked the softest growth in four months, and surpassed market expectations of 1.1%.
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