Europe midday: Shares fall as Hormuz skirmish weighs on sentiment

(Sharecast News) - European shares pared morning losses on Friday as the US and Iran exchanged fire in the Strait of Hormuz, raising fears that the fragile ceasefire between the two may not hold.

The pan-regional Stoxx 600 index was down 0.52% to 613 at 1152 BST with all major bourses lower.

US President Donald Trump said the ceasefire was still in place and brushed off the strikes as a "love tap".

Iran on Thursday accused the US of violating the agreement by targeting two ships at the Strait of Hormuz and hitting civilian areas, while Washington said it fired in retaliation at strikes on three of its destroyers in the key waterway.

Brent crude moved to $101 a barrel in response amid fears that the blockade of oil and other vital cargoes through the strait could continue, but had slipped back to $99 in late morning trade.

"All of a sudden, the potential 'Iran deal' headlines are replaced by news that the US had struck military targets in Iran after the country fired on three navy destroyers sailing in the Strait of Hormuz, suggesting that we're back to square one," said Swissquote analyst Ipek Ozkardeskaya.

"We have no idea how the situation will evolve, but the track record of the past two months is not really encouraging, and the Friday close is always a critical moment as the US tends to make decisive moves during no-market hours to give investors time to digest the information, hoping to push volatility into Monday and eventually drown out bad news with encouraging - often unfounded - announcements."

In equity news, British Airways and Aer Lingus owner IAG fell on a profit warning due to the Iran war.

Intertek fell after the testing and assurance specialist rejected private equity group EQT's sweetened £8.93bn offer saying it "significantly undervalues" the company, adding that it was still committed to a spinoff or demerger of its energy & infrastructure division.

Reporting by Frank Prenesti for Sharecast.com