European shares opened lower on Tuesday as escalating tensions between the United States and Iran weighed on investor sentiment, while corporate earnings from companies including BP and Ericsson remained in focus, according to Reuters.
The pan-European STOXX 600 index fell 0.4% to 638.17 points by 0810 GMT, with the travel and leisure sector emerging as the biggest loser, down 2%. Airline stocks came under pressure as higher oil prices raised concerns over fuel costs, with Air France and Lufthansa each declining about 2%.
Market sentiment weakened after Brent crude prices surged 2.6% to around $85 a barrel following a third consecutive night of U.S. strikes against Iran. Investors also reacted to U.S. President Donald Trump's announcement of a blockade on Iranian shipping and a 20% fee on cargo passing through the Strait of Hormuz, Reuters said.
The renewed geopolitical tensions have added another layer of uncertainty for companies and investors evaluating the global economic outlook and corporate earnings prospects, just weeks after hopes of a Middle East agreement had eased concerns over the conflict.
Among individual stocks, Swedish telecom equipment maker Ericsson tumbled 8% after reporting quarterly sales that came in slightly below analysts' estimates. The company also warned that rising component costs could weigh on its business, adding to investor concerns.
Energy stocks outperformed the broader market, rising 1.4% as stronger crude prices lifted the sector.
BP gained 3% after the oil major said its oil trading performance in the second quarter is expected to be slightly stronger than in the previous quarter, benefiting from elevated oil prices during the recent conflict in the Middle East, Reuters reported.
Meanwhile, German drug discovery company Evotec plunged 30% after cutting its 2026 outlook. The company cited delays in large strategic partnership agreements, with expected contributions now pushed back to 2027, according to Reuters.
