European shares subdued as fresh US strikes on Iran temper peace hopes

Brussels, Belgium. European shares were subdued on Tuesday as expectations for an imminent end to the Middle East conflict waned after the U.S. launched fresh attacks on Iran. The pan-European STOXX 600 was flat at 631.92 points by 0707 GMT.

Market sentiment

On Monday, the index closed at its highest since February 27, before the conflict started, and came within 1% of an all-time high on hopes that peace in the region could be near. The latest attacks and U.S. Secretary of State Marco Rubio’s remarks that negotiating a deal with Iran could “take a few days” tempered those expectations, while markets looked for signs that tensions could escalate further.

Oil and airlines

Brent crude prices rose 2%, adding to inflation concerns as the euro zone is heavily reliant on oil imports through the Strait of Hormuz. Energy-price-sensitive airlines such as Lufthansa and Ryan Air lost 1.3% each, and Morgan Stanley also downgraded the German airline.

Company moves

Ferrari fell 7% after the luxury sports car-maker unveiled its first fully electric car, at a time when competitors including Porsche and Lamborghini are scaling back their EV ambitions, citing weak demand. The stock was on track for its biggest daily loss since October and weighed on the automobiles and parts sector, which fell 2%. Most other sectors were mixed.