European equities ended lower on Tuesday, with the Euro Stoxx 50 extending its early-week decline as renewed tensions in Iran and climbing oil prices fueled investor unease. The benchmark index fell 0.80% to 6,368.98 points, retracing to levels last seen in early August.
Geopolitical instability in the Middle East and a 2.5% increase in Brent crude futures to $82.70 per barrel heightened inflation expectations and raised the prospect of further monetary tightening. The European Central Bank is widely expected to raise interest rates next week in response to persistent price pressures, with headline inflation in the euro area accelerating to 3.3% year-on-year in August, up from 2.6% in July, according to Eurostat data.
The ECB’s likely move follows signals from U.S. Federal Reserve officials, including Governor Kevin Warsh, reaffirming commitment to controlling inflation. A potential September rate hike by the Fed remains under consideration as central banks balance growth risks against price stability.
Among individual movers, Air Liquide advanced over 2% in Paris after activist investor Elliott Management disclosed a stake in the industrial gases group and pressed management to enhance profitability. Novartis surged more than 6% in Zurich following positive Phase IIb trial results for remibrutinib in relapsing multiple sclerosis, with UBS analysts calling the data an optimal outcome.
In contrast, Partners Group Holding slumped nearly 7% after posting quarterly results that failed to meet some investor expectations and announcing an unexpected leadership change. European oil stocks outperformed, with Eni up 1.5% and TotalEnergies gaining 2.8% as the sector rose 1.8%.
Travel and airline equities lagged, falling 2.3% as rising fuel costs and Middle East instability weighed on sentiment. The FTSE 100 declined 0.32% to 10,789.28, while the Swiss SMI edged up 0.34% to 14,334.79 points.
