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Investing.com - European stocks fell sharply Thursday, and crude prices soared, after Israel launched a series of strikes on Iran, igniting concerns over regional escalation and a hit to global growth.
The DAX index in Germany dropped 1.1%, the CAC 40 in France slipped 1% and the FTSE 100 in the U.K. fell 0.4%, retreating from Thursday’s record closing high.
Sentiment hit by Israel strike on Iran
Israel launched a large‑scale airstrike on Iran early Friday, hitting “dozens” of military and nuclear targets, while a state of emergency was declared across Israel amid warnings of an imminent missile and drone counter‑strike from Tehran.
Iran’s state media also reported that there were unconfirmed reports saying that Israel has killed Iran’s Revolutionary Guards Commander Hossein Salami.
Iran pledged a “harsh” retaliation against both Israel and the United States, while U.S. Secretary of State Marco Rubio said that Israel carried out its military action against Iran independently, citing self-defense as the driving motive behind the strikes.
The White House had earlier warned it would consider military measures should nuclear negotiations fail, with a key response deadline ending Thursday.
The attacks reignited concerns over risks to Middle East oil flows and global growth, which exacerbated the already fragile sentiment driven by global trade uncertainties.
Trump hints at new auto tariffs
U.S. President Donald Trump had added to those trade concerns on Thursday when he warned that he could raise auto tariffs soon, just a day after claiming that the U.S.-China trade deal was "done."
The president also said he will send letters to major U.S. trading partners in the next two weeks outlining his planned trade tariffs, ahead of a July 9 deadline to strike trade deals with his administration.
German, French inflation subdued
On the European economic data slate Friday, German inflation decreased to 2.1% in May, confirming preliminary data released earlier.
The consumer prices in Germany, which are harmonized to allow comparison with other European Union countries, showed a year-on-year rise of 2.1% in May, down from the 2.2% increase recorded in April.
Additionally, French consumer inflation also retreated to 0.7% on an annual basis in May, from 0.8% the prior month, matching the preliminary data, and illustrating the lack of inflationary pressure in the eurozone’s second-largest economy.
Fraport reports jump in passenger traffic
In the corporate sector, Frankfurt Airport handled 5.6 million passengers in May 2025, up 1.8% from a year earlier, as Fraport (ETR:FRAG) worldwide reported overall traffic growth.
Fraport on Friday said that cargo volumes at Frankfurt, including airfreight and airmail, rose 4.4% year-over-year.
Crude surges after Israeli strikes
Oil prices soared Friday after the Israeli strikes on Iran raised fears of broader Middle East conflict and major supply disruptions from this oil-rich region.
At 11:51 ET, Brent futures climbed 5.9% to $73.42 a barrel and U.S. West Texas Intermediate crude futures rose 6% to $72.14 a barrel.
Both contracts hit their highest in almost five months, reflecting heightened geopolitical risk, as investors feared any conflict could disrupt shipping routes or oil infrastructure across the Gulf.
"This has elevated geopolitical uncertainty significantly and requires the oil market to price in a larger risk premium for any potential supply disruptions," ING analysts led by Warren Patterson said in a note.