European stocks retreat after attack on Iran's gas field revives concerns

LONDON: European shares halted their ascent on Wednesday (Mar 18) after an attack on Iran's Pars gas field pushed oil prices higher and renewed fears of escalation in the Middle East, shattering the calm since the beginning of the week. The pan-European STOXX 600 declined 0.70 per cent to 598.25 after gaining as much as 0.67 per cent earlier in the session, ending a two-day winning streak. The attack on Pars was the first reported strike on Iranian energy infrastructure in the Gulf during the US-Israeli war, and prompted Tehran to warn its neighbours that their energy installations would be targeted "in the coming hours". "Up to now, energy infrastructure had been sort of off-limits. But this escalation brings back the risk that markets have been trying to forget," said Michael Brown, senior research strategist at Pepperstone. "There is a degree of optimistic bias in the market because everyone is still expecting that we get some sort of U-turn from (US President Donald) Trump, but what we've seen today is another wake-up call that it is not a given." The market moves show how reactive investor sentiment remains to developments in the Middle East, undermining hopes that stocks may have found a floor, especially in oil import-reliant Europe. Brent crude futures rose 4.75 per cent to US$108.33 a barrel, while US West Texas Intermediate crude jumped 1.89 per cent to US$98.03.CENTRAL BANKS IN FOCUS Investors will also parse commentary from Federal Reserve Chair Jerome Powell on Wednesday, while European Central Bank President Christine Lagarde is scheduled to speak later in the week. Both central bank chiefs are expected to lay out their outlook for interest rates, which could offer investors fresh clues on positioning. "They are going to try and be as non-committal as they possibly can. I don't think either of them is going to want to box themselves into a particular policy path at this point," Brown said. Consumer staples stocks slipped 2.72 per cent and were the biggest drag on the benchmark, while healthcare companies also fell 2 per cent. Banks were insulated from the selloff, rising 1.22 per cent for their third straight day of gains. Among individual movers, computer peripherals maker Logitech fell 6.07 per cent. UBS downgraded the stock to "neutral" from "buy", while lowering its price target. Diploma jumped 1 7.79 per cent to a record high after it raised fiscal 2026 guidance.