Europe midday: Stocks fall, oil jumps on US-Iran tensions

(Sharecast News) - European stock markets fell on Thursday as a renewed jump in oil prices and heightened tensions between the Washington and Tehran eroded risk appetite, while investors awaited a key inflation reading in the US.

With the exception of small gains in Milan, markets across the continent were in the red, led by a near-1% drop for London's FTSE 100. As a result, the benchmark Stoxx 600 was down 0.8% at 623.49 by the lunchtime period.

After hitting a five-week low on Wednesday, Brent crude bounced nearly 3% to $94.97 a barrel, rising as high as $95.98 after the US carried out fresh strikes on Iran, targeting a military cite in the port city of Bandar Abbas and shooting down four Iranian one-way attack drones. Iran's Islamic Revolutionary Guard Corps said it had retaliated by targeting a US air base in Kuwait.

Donald Trump said he wouldn't be rushed into a peace deal with Iran. At a White House cabinet meeting on Wednesday, the US President also said he wasn't concerned about the potential political impact of the conflict with Iran.

"The optimism which has persisted for much of this week about the prospects for a deal between the US and Iran is being severely tested," said AJ Bell investment director Russ Mould.

"A fresh exchange of strikes between the two countries is testing the fragile ceasefire and forcing a reassessment of the chances of a near-term agreement which can reopen the Strait of Hormuz and dial down the pressure the crisis is putting on the global economy."

In economic data, the European Commission's Economic Sentiment Indicator for the eurozone rose to 93.5 in May, up from a five-year low of 93.2 the previous month, topping expectations for a further deterioration to 92.8.

Looking ahead to the rest of the day, attention will turn to US inflation data for April, with the PCE - the Federal Reserve's preferred measure of inflation - due at 1330 BST. Core PCE is expected to rise to 3.3% from 3.2%.

Shares in Soitec jumped in Paris after the semiconductor-materials firm said it swung to positive free cash flow over its most recent fiscal year and pointed to 15% sales growth in its first quarter.

Delivery Hero was lower as investors continued to react to last weekend's news that Uber made an indicative takeover proposal worth €10bn. The ride-hailing group has been building its stake in the delivery company and now holds 36.83% of voting rights, at the time when Hong Kong investor Aspex Master Fund has halved its stake to 7.56%.

UK stock markets were being weighed down by a host of blue chips going ex-dividend, including Kingfisher, National Grid, Severn Trent, AB Foods, Hilton Foods and Breedon.