German stocks weakened midway through Wednesday's session as the continuing oil-price advance weighed on equities, with the DAX falling nearly 1% to 25,780 points and traders holding back ahead of the European Central Bank's interest-rate decision on Thursday.
The broader mid-cap MDAX declined 0.8% to 32,273, while the euro-zone benchmark Euro Stoxx 50 posted a steeper 1.1% loss.
Brent crude exceeded $100 a barrel on Wednesday, marking a gain of 64% year to date. Refined products such as diesel climbed even more sharply as the conflict in the Middle East has expanded toward the Red Sea near Saudi Arabia. European natural-gas prices rose for a fourth consecutive trading day following recent U.S. strikes.
Investors are pricing in sustained higher energy costs amid fears of further disruptions to oil production and transport, said Deutsche Bank strategist Jim Reid. "Skepticism is growing that oil prices will drop significantly in the coming months," he wrote.
The market is also looking ahead to the ECB's policy meeting on Thursday, where a second rate increase this year is widely expected.
Among individual names, Deutsche Börse plans to issue €600 million in convertible bonds to finance general corporate purposes and obligations, sending its shares down 1.9%.
Beiersdorf fell 1.5% after Deutsche Bank downgraded it from hold to sell. SAP shares gained 2.2%, rebounding from previous-day weakness triggered by renewed Wall Street concerns over artificial-intelligence competition in the software industry.
Defense-sector stocks were among the laggards. Rheinmetall, Renk, and Hensoldt dropped between 2% and 3.4%.
