Geopolitical Tensions Jolt European Markets Amid Middle East Strikes

European stocks fell sharply following Israel's strikes on Iran, which escalated geopolitical tensions and prompted investors to seek safety. The STOXX 600 dropped 1.2%, while oil prices surged, impacting airlines negatively but boosting energy and defense stocks.

European shares experienced a significant downturn at the opening of trading on Friday, as escalating geopolitical tensions following Israel's military action against Iran weighed heavily on global risk sentiment.

The pan-European STOXX 600 index fell by 1.2% to 543.54 points as of 0707 GMT, marking its fifth consecutive session in decline and signaling a potential weekly loss.

Israel's strikes, aimed at curbing Iran's nuclear ambitions, led to retaliatory actions by Tehran, including the launch of 100 drones. This heightened geopolitical instability is adding to existing market anxieties linked to U.S. tariff policies, causing a surge in oil prices and adversely affecting airline stocks. Nevertheless, energy and defense sectors saw gains, with Shell, BP, Dassault Aviation, and Leonardo all recording increases.

(With inputs from agencies.)