European equities moved lower on Friday as renewed hostilities between the U.S. and Iran pushed oil prices higher and weakened expectations for a near-term diplomatic breakthrough.
U.S. President Donald Trump stated that the ceasefire remained active even as clashes continued in the Gulf region, while Washington continued to wait for Tehran’s response to its proposal aimed at ending the conflict.
The pan-European STOXX 600 declined 0.8% to 611.69 points by 0703 GMT. Major indexes across the region also traded lower, with Germany’s DAX falling 0.9% and London’s FTSE 100 losing 0.5%.
Investor sentiment in Europe has remained highly reactive to geopolitical developments, as the region’s reliance on imported energy fuels worries about inflationary pressures and slower economic growth. Markets are currently pricing in at least three interest rate increases from the European Central Bank over the coming year.
Sentiment was further pressured by Trump’s warning that the European Union could face “much higher” tariffs if trade agreement obligations are not fulfilled by July 4.
Company Movers
Among individual stocks, British Airways parent IAG (LSE:IAG) dropped 5.2% after the airline group projected annual profit below previous expectations, citing sharply higher jet fuel expenses.
Meanwhile, Spanish travel technology firm Amadeus gained 3.7% after posting quarterly core earnings that exceeded analyst forecasts while reaffirming its outlook.
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