European Markets Close Sharply Lower As Middle East Tensions Hurt Sentiment

(RTTNews) - European stocks fell sharply on Tuesday, pushing down several indices to multi-week or multi-month lows, as investors continued to move away from riskier assets amid escalating tensions in the Middle East.

U.S. President Donald Trump suggested the war may last four to five weeks but could "go far longer than that," raising concerns a prolonged conflict could lead to a substantial spike in inflation.

A prolonged conflict in the Middle East and a persistent fall in oil and gas supplies from the region could cause a "substantial spike" in inflation and a "sharp drop in output" in the euro zone, ECB chief economist Philip Lane has warned in an interview with the Financial Times.

Citing Iranian media, Reuters quoted an Iranian Revolutionary Guard commander of saying that the Strait of Hormuz — the world's most vital transit route for crude oil — is closed and that Iran would set ablaze ships attempting the route.

Bank stocks tumbled again. Shares of airliners suffered another setback following several airlines announcing cancellation of diversion of their flights.

The pan European Stoxx 600 dropped 3.48%. The U.K.'s FTSE 100 ended down 2.75%, Germany's DAX drifted down 3.44% and France's CAC 40 declined 3.45%, while Switzerland's SMI slid 3.1%.

Among other markets in Europe, Austria, Belgium, Czech Republic, Denmark, Finland, Greece, Iceland, Ireland, Netherlands, Norway, Poland, Portugal, Russia, Spain, Sweden and Türkiye tumbled, with several markets losing between 3% and 6%.

In the UK market, Intertek tanked 18.1% despite reporting higher earnings for financial year 2025.

DCC, Endeavour Mining, Persimmon, Antofagasta, IAG, Fresnillo, Metlen Energy & Metals, HSBC Holdings, Standard Chartered, EasyJet, Anglo American Plc, Croda International, Rolls Royce Holdings, M&G, Reckitt Benckiser, Unilever, Barclays, British American Tobacco, Rio Tinto and Melrose Industries lost 3%-6%.

Industrial engineering company Smiths Group declined sharply after the company said that it has agreed to acquire DRC Heat Transfer (DRC) for a purchase price of £164m.

Smith & Nephew gained 3.6%. BP, The Sage Group, Relx, Pearson and Babcock International posted moderate gains.

In the German market, Beirsdorf plunged 19.8% following the company flagging a softer 2026 outlook citing cost and foreign exchange pressures.

Infineon, Bayer, Continental, Siemens, Symrise, Daimler Truck Holding, Munich RE, Commerzbank, Deutsche Bank, Fresenius, Henkel, BASF, Siemens Energy, Deutsche Post, Merck, E.ON and RWE lost 3%-7%.

Deutsche Boerse bucked the trend and moved up by about 2.5%.

In the French market, ArcelorMittal dropped by about 7.7%. Kering slid 6.5%, while Engie, Legrand, Saint-Gobain, Schneider Electric, Credit Agricole, Societe Generale, BNP Paribas, L'Oreal, Renault, STMicroelectronics, LVMH, Stellantis, Michelin and Hermes International lost 3.6%-7%.

TP and Capgemini moved higher, gaining about 5.3% and 3%, respectively.

In economic news, data from Eurostat said the annual inflation in the Euro Area rose to 1.9% in February 2026, up from January's 16-month low of 1.7% and above market expectations of 1.7%, according to a preliminary estimate.

Among the bloc's largest economies, the Harmonised Index of Consumer Prices (HICP) accelerated in France (1.1% from 0.4%), Spain (2.5% from 2.4%) and Italy (1.6% from 1.0%), while easing slightly in Germany (2.0% from 2.1%).

UK shop price inflation eased in February largely due to the fall in non-food prices, the British Retail Consortium said Tuesday.

Shop price inflation softened to 1.1% in February from 1.5% in the previous month. Prices were expected to climb 1.4%.

Non-Food prices fell 0.1% in February, in contrast to the 0.3% increase in January. Food inflation climbed 3.5% compared to the 3.9% increase in January.