European markets opened sharply lower on Tuesday as the escalating conflict between Iran and Israel entered its fifth day, prompting a flight to safety among investors.
The pan-European Stoxx 600 dropped 0.8%, touching its lowest level in over three weeks after gaining 0.4% on Monday.
Germany’s DAX led regional losses, falling 1.6% in early trading. France’s CAC 40 slipped 1.2%, while London’s FTSE 100 was down 0.7%.
Tensions continued to mount after US President Donald Trump urged Iranian civilians to evacuate Tehran, citing the country’s refusal of a proposed nuclear agreement.
Trump left the G7 summit in Canada early, stating the departure was unrelated to ceasefire negotiations, offering little clarity to markets.
Oil prices briefly rose on heightened geopolitical risk before paring gains.
Energy stocks were the only sector in positive territory, up 0.3%, while telecom shares led losses with a 1.4% decline.
The Iran-Israel conflict
US President Donald Trump on Tuesday dismissed suggestions that he was mediating a ceasefire between Israel and Iran, saying his early departure from the Group of Seven summit was due to “much bigger” matters.
The comment came shortly after he urged Iranian civilians to “immediately evacuate Tehran.”
The escalating conflict in the Middle East prompted a joint statement from G7 leaders, who reiterated their support for Israel and condemned Iran as the “principal source of regional instability and terror.”
The group also reaffirmed its stance that Iran must never acquire a nuclear weapon.
“We affirm that Israel has a right to defend itself. We reiterate our support for the security of Israel,” the G7 leaders said in the joint communique focused on the crisis.
Trump’s remarks followed French President Emmanuel Macron’s claim on Monday that the US president had offered to broker a ceasefire between Tel Aviv and Tehran.
“He has no idea why I am now on my way to Washington, but it certainly has nothing to do with a Cease Fire. Much bigger than that,” Trump wrote on Truth Social Tuesday.
White House Press Secretary Karoline Leavitt said Monday that Trump was cutting short his G7 trip due to “what’s going on in the Middle East.”
Shortly after, Trump posted on his social media platform, calling on Iranian civilians to evacuate the capital and added: “Iran should have signed the deal I told them to sign.”
The G7 statement also called for a broader de-escalation in the region, including an end to hostilities in Gaza and a resolution to what it described as the “Iranian crisis.”
UK-US trade deal
The United States and the United Kingdom signed a trade agreement on the sidelines of the G7 summit on Monday, reducing tariffs on select British exports as both nations move toward a broader trade pact.
The deal, the first formal trade agreement signed by Washington since US President Donald Trump unveiled his full list of reciprocal tariffs, reaffirms preferential tariff treatment for British-made automobiles and eliminates duties on aerospace exports from the UK.
Trump, speaking alongside British Prime Minister Keir Starmer, said a specific tariff rate for British steel and aluminum would be set “at a future time.”
Currently, UK steel and aluminum exports to the US are subject to a 25% tariff, half the 50% rate applied to other countries.
“We signed it and it’s done,” Trump told reporters, calling the agreement “a great deal for both,” and emphasizing its potential to generate jobs and boost transatlantic trade.
“The UK is very well protected, you know why? Because I like them, that’s why,” Trump added.
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