European equities fell on Tuesday as fading optimism around a Middle East peace deal collided with pre-election jitters in the United States, leaving investors reluctant to make bold moves.
The continent-wide Stoxx 600 benchmark dropped 0.58 percent to close at 645.66 points. Miners suffered the steepest losses, pressured by weakening copper prices.
A senior Iranian official told Reuters that Tehran and Washington remain far from any agreement to end their conflict. Overnight, American forces launched what they described as defensive strikes on Iran’s Qeshm island, further muddying the diplomatic picture.
Chris Beauchamp, chief market analyst at IG Group, noted that European investors had shown appetite to buy on dips, betting a ceasefire could push oil prices lower. Yet the absence of concrete progress, combined with uncertainty over the US midterm election outcome, kept many sidelined.
Brent crude oscillated throughout the session, settling down 1.2 percent but holding above US$100 per barrel.
On the corporate front, Zalando tumbled 6.6 percent after weaker gross margins and a net loss overshadowed marginally better-than-expected sales. The German online fashion retailer posted the steepest decline on the Stoxx index. The broader retail segment slid 2 percent.
Technology shares lost nearly 1 percent, with ASML falling 1.6 percent. The decline echoed earlier weakness in Asian tech benchmarks as investors questioned the durability of the AI-driven rally following lackluster results from US cloud providers last week. Apple’s downbeat gross margin forecast for the crucial holiday quarter compounded the cautious sentiment.
Meanwhile, Gilles Guibout, head of European equities at BNP Paribas Asset Management, argued that valuations had cooled while earnings fundamentals remained solid. He favored buying on weakness, citing sustained investment in computing infrastructure.
That demand showed up in Britain, where Drax surged 6.6 percent on news of a data centre partnership with Brookfield and Radiant that could attract more than £20 billion (US$26.8 billion).
Bayer climbed 3.6 percent after raising its 2026 profit outlook. Lufthansa gained 3.9 percent despite trimming its annual forecast, as analysts pointed to resilient underlying results. Philips advanced 4.8 percent after reaching a preliminary settlement with the US Department of Justice over its 2021 recall of sleep and respiratory devices. Adidas slipped 2.8 percent following a UBS downgrade to “sell” from “neutral.”
As results season continues and election outcomes unfold, traders will watch whether European valuations hold enough appeal to attract renewed buying.
