Source: Sharecast
The Stoxx 600 was down 0.7% at 545.95 early on, with falls of 1% or more registered in Frankfurt, Milan and Madrid.
News that Israel's Air Force attacked Iran's nuclear weapons programme and ballistic missile sites overnight prompted a scaling back of risk appetite among investors.
Israeli prime minister Benjamin Netanyahu said attacks would keep going for "as many days as it takes".
While market participants had been speculating about Israeli strikes for some time now, the price of Brent crude was 5.9% higher at $73.48 a barrel, having surged to a high of $78.50 earlier on – its highest since January. With Iran responsible for 5% of the global oil supply, there's a risk of significant disruption.
"So far, the market is treating it as a controlled burn: oil popped, then faded. Crude’s telling you traders are watching Hormuz like a hawk," said Stephen Innes, managing partner at SPI Asset Management.
"No shipping disruption, no real moonshot rerating — yet. But if that Strait gets blocked, or if Tehran overplays its hand and proxies hit US targets, $75 Brent becomes the new floor, not the ceiling."
In macro news, German consumer price inflation was confirmed at 2.1% in May, unchanged from the preliminary estimate released two weeks ago, and matching the lowest level since October 2024.
Meanwhile, German wholesale price inflation slowed to an annual rate of 0.4% in May, down from 0.8% in April, continuing to pull back after hitting a recent two-year high of 1.6% in February.
Still to come are industrial production figures from the eurozone for April, and the region's trade balance figures.
Oil stocks jump
Oil majors BP, Shell and TotalEnergies were all putting in decent gains as the price of crude jumped.
Defence stocks were also bucking the trend in morning trade, with BAE Systems, QinetiQ, Babcock and Rheinmetall all trading higher.
Similarly, shipping stocks Frontline, AP Moeller-Maersk and Aker BP were in favour as potential disruption risks raise the probability of higher freight rates.
Meanwhile, economic bellwethers, such as those in the banking sector, were being sold off, including Commerzbank. Deutsche Bank,. Barclays, BNP Paribas and HSBC.
