BRUSSELS/FRANKFURT/PARIS (dpa-AFX) - European stocks may drift lower at open on Tuesday following a downbeat session on Wall Street overnight.
U.S. stock index futures were mixed amid rising concerns over Fed policy and escalating U.S.-Iran tensions.
Asian markets traded lower as surging oil prices fueled worries over inflation and raised the likelihood of tighter monetary policy, with traders now pricing a 57 percent chance of a September rate hike by the Federal Reserve.
As inflation rises on elevated energy prices, the European Central Bank (ECB) is likely to raise its key interest rates by 25 basis points at its policy meeting on September 9-10.
Meanwhile, the manufacturing sector in China continued to expand in August, and at a faster rate, the latest survey from Caixin revealed today with a manufacturing PMI score of 51.5, up from 50.9 in July.
Brent crude futures rose more than 1 percent toward $92 a barrel in Asian trade on concerns about further disruptions to energy supplies through the Strait of Hormuz.
An Iranian official dismissed as 'laughable' AI-gen videos shared by U.S. President Donald Trump showing Iran's oil hub Kharg Island being 'blown to smithereens', with no further details.
Iranian President Masoud Pezeshkian said his country was not seeking war but will never remain silent in the face of aggression.
The U.S. dollar was steady after declining in the previous session. Gold dropped half a percent to $4,426 an ounce.
U.S. stocks ended lower overnight as surging oil prices and Treasury yields amid renewed hostilities between Washington and Tehran added to worries about inflation and interest rates.
President Trump threatened to hit Iran 'hard' after the two foes traded fire for the first time in over a month.
The Dow dropped 0.7 percent, the S&P 500 gave up 0.3 percent and the tech-heavy Nasdaq Composite slipped 0.1 percent.
European stocks ended firmly in the red on Monday after the U.S. attacked two Iranian rocket launchers on Larak Island and Iran retaliated with attacks on the United Arab Emirates and Jordan.
The pan-European STOXX 600 fell 0.6 percent. The German DAX tumbled 1.2 percent and France's CAC 40 shed 0.8 percent while the U.K. markets were closed for a bank holiday.
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