European Markets Edge Higher Amidst Escalating Middle East Tensions
LONDON – European stock markets saw modest gains Thursday as investors navigated a volatile landscape shaped by escalating conflict in the Middle East. The pan-European Stoxx 600 was up 0.5% by 11:08 a.m. London time, recovering from earlier dips. The UK’s FTSE 100 rose 0.3%, Germany’s DAX added 0.4%, and France’s CAC 40 also gained 0.4%. Spain’s IBEX saw the largest increase, up 1%.
The positive movement in Spain comes despite a public dispute with the United States. U.S. President Donald Trump threatened to cut off all trade with Spain after Madrid refused to allow U.S. forces to use its bases for potential strikes against Iran, stating Tuesday, “Spain has been terrible.” Spanish Prime Minister Pedro Sánchez labeled the Middle East crisis a “disaster” on Wednesday.
The White House subsequently claimed Spain would cooperate militarily, a claim Madrid has vehemently denied.
Elsewhere, German tank maker Renk reported a 19.8% increase in revenue for the 2025 fiscal year, reaching 1.37 billion euros (approximately $1.6 billion), driven by growth in its defense business. The company’s order backlog stands at 6.7 billion euros, up from 5 billion euros in 2024. Renk forecasts revenue of 1.5 billion euros for 2026, acknowledging ongoing geopolitical uncertainty. Despite the positive financial results, Renk’s shares were down around 3% Thursday.
Global attention remains firmly fixed on the conflict between the U.S. and Israel and Iran, with attacks intensifying in recent days. Israel launched fresh attacks on Tehran Wednesday, with its defense minister vowing to “crush” Iranian capabilities. The U.S. military reported destroying 17 Iranian ships and nearly 2,000 targets.
Reports indicate senior Iranian clerics are considering naming Mojtaba Khamenei, son of the late Ayatollah Ali Khamenei, as the next supreme leader.
The ultimate outcome of “Operation Epic Fury,” as the U.S.-Israel campaign is known, remains unclear, with experts warning of a potentially protracted conflict should the Iranian regime prove resilient.
Oil prices continued their upward trend, with Brent crude gaining 1.8% to $82.79 a barrel and West Texas Intermediate crude rising 2% to $76.19 a barrel.
“The Middle East situation is unfolding at a rapid pace, and investors are finding it hard to make a firm call on whether there will be a sustained energy crisis or just a short, sharp shock,” said Dan Coatsworth, head of markets at AJ Bell, in a Thursday morning note.
The uncertainty also impacted bond markets, with yields on French and Italian 10-year government bonds rising by 6 basis points, while German and British counterparts saw increases of around 5 basis points.
CNBC contributed to this report.