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European shares drop amid caution after Israel’s attacks on Iran
European shares opened sharply lower this morning after Israel’s attack on Iran dented global risk sentiment and sent investors flocking to safe-haven assets.
The pan-European STOXX 600 was down 1.2 percent, at 543.54 points, as of 07:07 GMT. The benchmark is on track to log a fifth session in the red, setting it up for a weekly decline. The tensions add to caution in global financial markets as they grapple with the impact of US President Donald Trump’s tariff policy.
The travel and leisure sector was down 3.1 percent. British Airways owner ICAG tumbled 4.8 percent, Lufthansa was down 4.6 percent and EasyJet dropped 4.3 percent. Cruise operator Carnival’s London-listed shares slipped 5 percent.
On the flip side, energy stocks soared, with Shell and BP up 1.9 percent each. Shares of defence companies were also higher, with France’s Dassault Aviation up 1.3 percent and Italy’s Leonardo up 2.3 percent.
Israel is turning the whole world into a war economy...
Germany involved as well
Iran must not be allowed to develop a nuclear bomb, Germany’s Merz says
Chancellor Friedrich Merz has reaffirmed Germany’s belief in Israel’s right “to defend its existence” and reiterated that Iran cannot be allowed to develop a nuclear bomb while calling for both sides to refrain from escalation.
Merz said in a statement that he was informed of the Israeli attack and its objectives in a phone call with Israeli Prime Minister Benjamin Netanyahu this morning. It was not immediately clear whether that call took place before the attacks, as Germany’s Spiegel news magazine reported.
Merz said that after the phone call, he had convened a meeting of the government’s security cabinet, which had agreed to ramp up protection of Jewish and Israeli facilities in Germany and take all necessary measures to protect German citizens.
He added that Germany was coordinating closely with its partners, including the US, UK and France.
Iran nuclear talks stalled for now due to what Tehran sees as US culpability
Iran is unlikely to resume nuclear talks with US officials soon after pulling out of this weekend’s negotiations in Oman, says Mohammad Eslami, a research fellow at Tehran University.
“The only thing that the Israeli attack destroyed totally was the diplomatic solution that was under way between the Iranian [diplomats] and the Americans. Right now, there is no decision by the Iranians to come back to the negotiations because … from the Iranian point of view this attack was with the support of the Americans,” Eslami said from Tehran.
“Even if the Americans did not engage directly, it does not mean that they were not supporting [Israel] in the operation,” he said.
The future of any talks will depend on how Israel and the US respond to Iran’s forthcoming counterattack, he added, and whether they escalate further.
Israeli attack ‘designed to kill chances’ of striking a nuclear deal
Israel’s attacks on Iran are designed to derail nuclear talks between the US and Iran, an analyst says.
“Israel’s unprecedented strikes across Iran overnight were designed to kill President Trump’s chances of striking a deal to contain the Iranian nuclear programme,” says Ellie Geranmayeh, deputy head of the Middle East and North Africa programme at the European Council on Foreign Relations.
“While some Israeli officials argue that these attacks aimed to strengthen the US leverage in the diplomatic path, it is clear their timing and large-scale nature was intended to completely derail talks,” she said.
