By Barbara Kollmeyer, MarketWatch
European stocks logged losses on Wednesday, with investors rattled by fears of rising U.S.-Iran tensions after the latter fired missiles at two military bases in Iraq housing American troops.
The Stoxx Europe 600 index /zigman2/quotes/210599654/delayed XX:SXXP -0.73% fell 0.4% to 416.13, after gaining 0.3% on Tuesday, a move that snapped a two-day losing streak. The German DAX 30 index /zigman2/quotes/210597999/delayed DX:DAX -0.54% dropped 0.6% to 13,143.75, the French CAC 40 index /zigman2/quotes/210597958/delayed FR:PX1 -0.98% lost 0.4% to 5,985.17 and the FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX -1.27% fell 0.5% to 7,633.61.
Iranian state TV said the missiles, fired early on Wednesday, were in retaliation for the death of Revolutionary Guard Gen. Qassem Soleimani, who was killed in an American drone strike last week. The move raised fears of a wider Middle East conflict, initially causing oil prices /zigman2/quotes/209723049/delayed CL00 -0.12% to climb and U.S. stock futures to tumble, while gold prices surged as investors sought perceived haven investments.
However, those moves pared after Iran’s foreign minister tweeted that the country wasn’t seeking further escalation. In addition to initial reports of no casualties from the strikes, President Donald Trump tweeted that “All is well,” and that he will be making a statement in the morning.
“For risk appetite to return, the two sides may have to resolve the issue in peace and avoid fueling fears of a full-blown war. In such case, the havens are likely to pull back, and equities may rebound again,” said Charalambos Pissouros, senior market analyst at JFD Group, in a note to clients.
Also rattling investors was news that a Boeing /zigman2/quotes/208579720/composite BA -0.91% 737 bound for Ukraine crashed in Iran after takeoff, killing all 176 passengers and crew members on board, Iranian state TV reported. That left some airline shares under pressure in Europe, with Air France-KLM /zigman2/quotes/205396176/delayed FR:AF +1.87% down 2.6%, Ryanair Holdings /zigman2/quotes/205429530/delayed IE:RY4C +0.52% dropping 1.4% and Deutsche Lufthansa /zigman2/quotes/205496028/delayed DE:LHA -2.24% off 1.8%.
Shares of Boeing rival Airbus /zigman2/quotes/208224336/delayed FR:AIR +0.53% eased 0.3%.
Banks and drug stocks led the declines in Europe, while oil companies such as BP /zigman2/quotes/207305210/composite BP -2.69% /zigman2/quotes/202286639/delayed UK:BP -3.72% and Total /zigman2/quotes/201824152/composite TOT -1.26% /zigman2/quotes/206172043/delayed FR:FP -2.35% logged modest losses. As well, shares of Nestlé /zigman2/quotes/208115528/delayed CH:NESN -0.39% /zigman2/quotes/210131093/composite NSRGY -0.11% dropped 1.4%.
Shares of NMC Health PLC tumbled 15% on Wednesday after news that two controlling shareholders sold shares worth nearly $500 million to cover their debts. The firm said earlier this week it would assess its cash position after short-selling firm Muddy Waters questioned the healthcare provider’s finances.
Elsewhere, German manufacturing orders fell in November, signaling that a downturn in the country’s industrial sector is continuing.