European equities closed sharply lower on Tuesday as surging energy prices deepened the challenges facing the region’s corporate sector. The Eurozone’s STOXX 50 shed 1.4% to 5,815, while the pan-European STOXX 600 declined 1.1% to 606.
Efforts to break the deadlock between the US and Iran failed after both sides rejected each other’s compromise proposals, prompting US President Trump to warn that the current ceasefire is close to collapsing. The ensuing spike in oil and natural gas prices coincided with fresh signs of rising inflation in the US and mounting political instability in the UK, pushing up euro-denominated sovereign bond yields.
Higher yields weighed heavily on financials: banks and insurers dropped, with Santander, BNP Paribas, and ING each losing 2.3%, while Munich Re slumped 6.3% after releasing its results. Siemens Energy also came under pressure from earnings and fell 5.7%.
At the same time, a global sell-off in AI-related stocks hit European technology names, driving Prosus down 5.8% and ASML lower by 3.1%.
