European stocks closed sharply lower on Tuesday, surrendering early gains amid growing skepticism that the US and Iran will reach a deal to restore energy exports from the Persian Gulf. The Eurozone’s STOXX 50 slipped 0.7% to 5,939, while the pan-European STOXX 600 fell 0.8% to 616.
US President Trump had earlier struck an optimistic tone, suggesting talks with Iran could take place soon, even as he confirmed that the ceasefire expiring tomorrow would not be extended. However, increasingly hawkish rhetoric from both sides has dimmed hopes of further de-escalation.
Oil and natural gas prices in Europe climbed again, worsening the margin outlook for major industrials; shares in Safran, Rheinmetall, and Airbus dropped between 3% and 7%. At the same time, bond yields rebounded, putting pressure on the banking sector, with UniCredit, Santander, and BBVA each losing close to 2%. L’Oréal declined 1.5% ahead of its earnings release tomorrow.
