BRUSSELS/FRANKFURT/PARIS (dpa-AFX) - European stocks are set for a broadly lower open on Wednesday as investors react to escalating Middle East hostilities and await Thursday's ECB rate decision.
Brent crude prices rose toward $100 a barrel as renewed tensions in the Gulf region raised concerns about further disruptions to global oil supplies.
Iran has launched a barrage of missiles targeting U.S. military positions in Jordan and warned all tanker crews in Bahraini and Kuwaiti to 'immediately abandon their vessels', whether at anchor or at berth in ports, after the U.S. destroyed five Iranian tankers in the Gulf of Oman and near Kharg Island, a major crude export hub.
A U.S. official said the strikes came in response to alleged attempts by Iran to target a U.S. warship with ballistic missiles twice over two days.
As energy costs climb, the European Central Bank (ECB) is all but certain to raise interest rates by 25 basis points on Thursday.
Across the Atlantic, markets now put the odds of a Federal Reserve rate hike on September 16 at about 60 percent, but the decision largely hinges on upcoming inflation data later in the week.
The producer price index for August is due on Thursday, followed by the consumer price index on Friday.
Data showed earlier in the day that China's consumer inflation accelerated for the first time since April in August and factory-gage prices grew faster than expected, driven by higher global commodity prices.
In trade news, the White House said a ban on imports of some dairy products and motorcycles from Canada along with most alcoholic beverages would take effect in three weeks, on Sept. 29, escalating the ongoing trade war between the two neighbors and longtime allies. The ban comes after retaliatory tariffs promised by Canada kicked in earlier Tuesday.
Meanwhile, the European Union and Canada are reportedly working toward a new, broader relationship that will range from trade to security.
Asian stocks were muted even as chip stocks extended their recent gains on sustained investor interest in the artificial-intelligence trade.
The U.S. dollar wobbled in Asian trade while gold edged up 0.7 percent to $4,387 an ounce after falling for three straight sessions.
U.S. stocks closed lower overnight as traders returned from the Labor Day holiday.
The Dow tumbled 1.2 percent, the S&P 500 shed 0.6 percent and the tech-heavy Nasdaq Composite dropped 0.3 percent as higher energy prices and rising bond yields clouded the outlook for inflation and the Federal Reserve's rate path.
Renewed trade tensions between the U.S. and Canada also weighed on sentiment as Canada matched U.S. tariffs 'dollar-for-dollar', impacting 700 products and multiple industries.
European stocks ended on a muted note on Tuesday amid rate-hike worries and political uncertainty in Germany.
The pan-European STOXX 600 finished marginally lower. The German DAX ended little changed and France's CAC 40 edged up 0.1 percent while the U.K.'s FTSE 100 edged down marginally.
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