Investing.com — European stocks declined on Friday as a fresh exchange of fire between the United States and Iran shook confidence in a month-long ceasefire, sending investors fleeing risk assets amid deepening fears over global energy supplies.
The pan-European Stoxx 600 slipped 0.7%, Germany’s dropped 1.4%, the fell 0.4% and France’s declined 1.1%.
Sentiment soured after U.S. Central Command said American destroyers transiting the Strait of Hormuz came under Iranian missile, drone and small-boat attacks on Thursday, prompting retaliatory U.S. strikes on Iranian port facilities at Bandar Abbas and Qeshm.
Iran accused Washington of violating the ceasefire and said the U.S. had also targeted Iranian oil tankers near Jask port and several coastal areas overlooking the waterway.
Secretary of State Marco Rubio said Washington expected Iran’s formal response to a diplomatic proposal later on Friday, expressing hope it would lead to “serious negotiation.”
Iranian Foreign Minister Abbas Araghchi pushed back, writing on X that “every time a diplomatic solution is on the table, the US opts for a reckless military adventure,” and insisting Iran would “never bow to pressure.”
At least one Iranian lawmaker went further, saying Tehran neither trusted negotiations nor accepted the current ceasefire, per state media.
The flare-up dashed hopes that had driven European and U.S. stocks sharply higher earlier in the week, when reports emerged that Washington and Tehran were close to a one-page framework for renewed peace talks, expected to kick off in Pakistan.
Those negotiations had stoked optimism that the Strait of Hormuz, effectively closed since the war began on February 28, could reopen, easing a global energy squeeze.
, the owner of British Airways, warned annual profit would be lower than forecast as soaring jet fuel costs linked to the Iran war weigh on earnings.
Testing firm fell 4% after rejecting a third sweetened £8.93 billion takeover bid from Swedish private equity firm EQT, saying the offer significantly undervalued the company.
Property portal bucked the trend, reaffirming its 2026 guidance after its AI-powered tools drove core membership growth in line with expectations.
France’s transport minister said he did not expect massive flight cancellations this summer despite jet fuel shortages, though Transavia France has already cut 2% of its May and June flights as Europe scrambles for alternatives to Middle Eastern supplies that account for three-quarters of the continent’s aviation fuel.
The mood was further darkened by British political developments, as Keir Starmer’s Labour Party suffered heavy losses in local elections, with the populist Reform UK party of Nigel Farage making sweeping gains across England, Scotland and Wales.