Q3 Earnings Alert! Plan early for this week’s stock reports with all key data in 1 placeSee list

European shares close lower on growing fears of Iran attack on Israel

Published 10/01/2024, 03:19 AM
Updated 10/01/2024, 12:26 PM
© Reuters. FILE PHOTO: The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, September 27, 2024. REUTERS/Staff/File photo
NESTE
-
ABI
-
STOXX
-
1COV
-

By Shashwat Chauhan and Pranav Kashyap

(Reuters) -European shares reversed initial gains to close lower on Tuesday, as investors moved out of riskier assets amid escalating geopolitical fears that Iran was planning an attack on Israel.

The pan-European STOXX 600 closed 0.4% lower, reversing course after rising as much as 0.5% during the day.

A gauge of STOXX volatility spiked to a more than three week high. Most STOXX sectors fell, with euro zone banks leading losses, down 2.8%.

Personal and household goods and retail rounded out top decliners, down 1.7% and 1.3%, respectively.

The United States has indications Iran is preparing to imminently launch a ballistic missile attack against Israel that could be at least as large as a strike that Tehran staged earlier this year, U.S. officials said.

"It's a classic risk-off (move) ... however, it's unlikely to last because when they've (Iran) attacked in the past, it quickly fizzled out," said Giles Coghlan, managing director at GCFX.

"I would expect this dip to be bought quite quickly in equities," Coghlan added.

Bucking the trend, heavyweight energy stocks jumped 1.3% tracking a more than 3% advance in crude oil prices. [O/R]

Defence companies such as Germany's Rheinmetall and Sweden's Saab also rose 5.1% and 3.5%, respectively.

Euro zone government bond yields, which move inversely to prices, extended their declines as investors sought safe-haven assets. [GVD/EUR]

Yields had initially fallen after data showed euro zone inflation dipped below 2% for the first time since mid-2021 in September, reinforcing an already solid case for a European Central Bank rate cut this month.

Rate-sensitive real estate ended up 1.1%, while utilities, often traded as a bond proxy, gained 0.4%.

Meanwhile, manufacturing activity across the euro zone declined at its fastest pace this year in September, while the German manufacturing sector also contracted at its fastest rate in a year, PMI data showed.

France's manufacturing sector continued to contract in September, while Italy's manufacturing activity contracted for a sixth straight month in September.

© Reuters. FILE PHOTO: The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, September 27, 2024. REUTERS/Staff/File photo

Among other headlining stocks, chemicals maker Covestro gained 3.8% after Abu Dhabi National Oil Company (ADNOC) said it had struck a deal to buy the chemicals maker for 14.7 billion euros ($16.3 billion), including debt.

Gucci owner Kering (EPA:PRTP) slipped 2.9% after Goldman Sachs downgraded its rating to "sell", while brewer Anheuser-Busch Inbev rose 1.6% after Citi upgraded its rating to "buy".

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.