European stock markets opened lower on Thursday as an intensifying confrontation in the Middle East undermined investor risk appetite and traders prepared for fresh guidance from central banks.
The pan-European STOXX 600 index fell 1.3% to 590.43 points by 0809 GMT, with the industrials sector accounting for the largest single drag on the benchmark. London equities were 1% lower as market participants awaited the Bank of England's interest rate decision.
Sector moves were notable. Miners declined about 3% as gold prices retreated, and declines among some of the region's largest financial stocks added downward pressure on the index. Against this backdrop, attention turned to the European Central Bank, which is all but certain to keep its policy rate unchanged at 2% later in the day.
Analysts and market participants said they would be watching policy commentary closely. Officials' remarks are expected to be parsed for indications of how the rise in oil prices might affect economic growth and the cost of living in the euro area. Separate interest rate decisions are also scheduled for Zurich, Copenhagen and Stockholm on Thursday, contributing to a broader day of monetary policy focus in Europe.
Global markets were further unsettled after the Iran conflict deepened when Tehran blamed Israel for strikes on its installations in the large South Pars gas field. The development added an additional geopolitical risk premium to trading, reinforcing the risk-off tone.
On the corporate front, Logitech shares advanced 2.4% following the company's announcement of a new $1.4 billion share-buyback program. The buyback was the principal driver behind the stock's positive move during an otherwise downbeat session for European equities.
Market context:
- STOXX 600 down 1.3% at 590.43 by 0809 GMT.
- Industrials were the biggest drag on the pan-European benchmark.
- Miners fell 3% as gold prices pulled back; heavyweight financials also weighed on the index.
- ECB expected to hold rates at 2%; policymakers' comments will be assessed for oil-price impacts on growth and inflation.
- Interest rate decisions also due in Zurich, Copenhagen and Stockholm.
- Logitech rose 2.4% after announcing a $1.4 billion share-buyback program.