European Stocks Drop After US-Iran Strikes, Oil Lifts Energy

European stocks fell as oil prices rose after the US and Iran exchanged fresh strikes overnight, with investors also focusing on the start of the earnings season.

(Bloomberg) — European stocks fell as oil prices rose after the US and Iran exchanged fresh strikes overnight, with investors also focusing on the start of the earnings season. The Stoxx Europe 600 Index was down 0.2% at 8:28 a.m. in London, with construction and travel and leisure shares leading the declines. The energy sector made the most gains as Brent crude climbed 3.7% to $79 a barrel.

Washington and Tehran have issued conflicting declarations over whether the Strait of Hormuz is open to shipping. US Central Command said American forces carried out a new round of strikes designed to degrade Tehran’s ability to attack shipping in the waterway. Last week, the Stoxx Europe 600 Index snapped four weeks of straight gains on concerns that rising US-Iran tensions will stoke inflation.

The second-quarter earnings season gets underway in earnest this week, with luxury companies Burberry Group Plc and Richemont SA among those reporting. “We think that this week is going to be one of volatile sideways movements before the rally can accelerate again,” said Joachim Klement, head of strategy at Panmure Liberum. Citigroup Inc.’s strategist Beata Manthey remains neutral on European stocks excluding the UK and views them as an attractive diversifier against AI volatility.

She also downgraded UK equities to underweight from overweight, saying they’re “less appealing in an environment where earnings growth and market leadership are broadening.” For more on equity markets: - Healthcare Looks Ready to Star in Rotation Trade: Taking Stock - M&A Watch Europe: Akzo Nobel, Monte Paschi, Addiko, Bridgepoint - US Stock Futures Fall as Oil Climbs on Latest US-Iran Tensions You want more news on this market?

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—With assistance from Sagarika Jaisinghani.