Turbulent Markets: Middle East Tensions and AI Selloff Rattle Europe

The European STOXX 600 index fell to a two-week low amid Middle East tensions and an AI stocks selloff. Airline stocks struggled with rising oil prices, while tech shares declined across global markets. Monte dei Paschi rose after a takeover bid by Intesa Sanpaolo, while investors eye the ECB's upcoming rate decision.

The European market faced turbulence as the STOXX 600 dropped to a two-week low, driven by escalating Middle East tensions and a global selloff in AI stocks. Italian lender Monte dei Paschi di Siena surged following a takeover attempt by Intesa Sanpaolo, despite broader declines.

The STOXX 600 fell 0.9% to 616.04 points by 0812 GMT, with regional indexes mirroring the downward trend. Crude oil prices spiked over 4% amid renewed conflict between Israel and Iran, causing concern for energy-reliant Europe and crippling airline stocks like Lufthansa and Air France.

Tech stocks suffered losses, reflecting declines in US and Asian markets. Infineon and BE Semiconductor saw declines, while AI equipment makers Legrand and Schneider Electric dropped as well. Attention now turns to the European Central Bank's rate decision on Thursday, as a 25-basis-point hike is anticipated.