BRUSSELS/FRANKFURT/PARIS (dpa-AFX) - European stocks are seen opening on a tepid note Wednesday as investors weigh U.S.-Iran tensions and await key U.S. inflation reading for fresh insights into market expectations for future interest rates in the face of rising energy-driven inflation risks.
Analysts estimate that the U.S. inflation rate may have climbed to 4.2 percent in May, which could be its highest level in three years in the face of increased living costs.
U.S. stock index futures edged lower as the U.S. military launched fresh strikes against Iran in a very strong, powerful response to the downing of a U.S. Army Apache helicopter off the Oman coast.
It was said that U.S. fighter jets struck Iranian air defense systems and radar sites near the Strait of Hormuz.
Iran also launched missiles and drones toward U.S. targets in the region and warned that 'heavier and broader' attacks would follow if the United States continued aggression against Iran.
Iranian Foreign Minister Abbas Araghchi said that no attack or threat from the United States will be left unanswered.
'Despite its defeats on the battlefield, the U.S. opted to test our determination,' Araghchi wrote on X and also asked foreign forces to leave the region.
Asian markets were broadly lower as a recovery in chipmaking stocks fizzled out and hopes for a U.S.-Iran peace deal waned.
Data showed earlier today that China's consumer price inflation unexpectedly stalled in May while factory prices rose at the fastest pace in almost four years amid higher energy and raw material costs.
Elsewhere, Japan's producer price index jumped 6.3 percent year-on-year in May, up from a 5.3 percent gain in April and beating market forecasts of 5.5 percent as inflationary pressures rippled across domestic supply chains.
The dollar was steady in Asian trade while gold slumped 1.8 percent to $4,183 an ounce on inflation and interest rate worries.
Brent crude futures were little changed below $92 a barrel after tumbling as much as 4.9 percent on Tuesday.
Overnight, U.S. stocks fluctuated before closing mostly lower as a rebound in technology stocks tied to the artificial intelligence boom ran out of steam.
That said, the downside in the broader market remained capped by falling crude prices and stronger-than-expected housing data.
On the geopolitical front, President Trump claimed the U.S. and Iran could reach a peace deal within 'two or three days' and that the Strait of Hormuz would open 'immediately' after such a deal.
However, raising doubts about prospects for a truce in the Middle East, Trump later vowed to respond to Iran's shooting down of a U.S. helicopter that was patrolling the Strait of Hormuz.
The tech-heavy Nasdaq Composite lost 1 percent and the S&P 500 gave up 0.3 percent while the narrower Dow gained 0.2 percent.
European stocks ended mostly lower on Tuesday, reversing early gains amid losses in U.S. peers.
The pan-European STOXX 600 dropped half a percent. The German DAX dipped 0.7 percent and the U.K.'s FTSE 100 tumbled 1.4 percent while France's CAC 40 finished marginally higher.
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