European Stocks Plunge Amid Escalating Iran-Israel Tensions

(MENAFN) European markets wrapped up Tuesday with notable declines, as investor anxiety intensified over escalating conflict between Iran and Israel.

The Stoxx Europe 600, a key barometer for the region, dropped by 0.85%, shedding 4.65 points to finish at 542.26.

Germany's DAX 40 took the biggest hit among major indexes, retreating 1.12% to close at 23,434.65. In the UK, the FTSE 100 slipped 0.46% to end the session at 8,834.03. France's CAC 40 gave up 0.76% to settle at 7,683.73, while Italy's FTSE MIB 30 slid 1.36% to 39,387.22.

The sell-off comes as fears grow over a broader regional conflict following Israeli air raids launched Friday against several Iranian targets, including military and nuclear facilities. In retaliation, Tehran fired a series of missile strikes over the weekend.

Israeli authorities stated that Iranian missile strikes have resulted in the deaths of at least 24 people and left hundreds more injured. In contrast, Iranian officials reported that Israeli attacks have killed no fewer than 224 individuals and wounded over 1,000 others.

Global investors remain on edge, wary that the unrest could drag on and potentially affect critical energy routes. While oil prices pulled back slightly—helped by Iran’s decision not to block the Strait of Hormuz—volatility in energy markets persists, leaving traders cautious.

Beyond the geopolitical storm, all eyes are on upcoming monetary policy signals. The Federal Reserve is set to announce its latest interest rate decision following Wednesday’s Federal Open Market Committee (FOMC) meeting. Simultaneously, the Bank of England will release its own rate verdict.

Consensus expectations suggest that both central banks will maintain current policy rates.

In a separate development, the UK and US unveiled a new trade arrangement on Tuesday, delivering meaningful tariff cuts for select British industries.

Under the deal, tariffs on UK-made cars exported to the US will fall to 10%, a substantial drop from the previous 27.5% rate. The aerospace sector saw an even bigger win, as duties on products like aircraft engines and parts will be eliminated entirely.

However, the pact has faced criticism for not addressing all trade barriers. UK steel and aluminum exports to the US will continue to face a 25% duty—lower than the 50% rate imposed during the Trump administration but still a competitive handicap for British producers.

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