European stocks fell on Wednesday as investors assessed developments in the US-Iran negotiations, while shares of defense firm Rheinmetall declined after a media report said Germany intends to abandon plans to build its largest warship since World War II.
The pan-European STOXX 600 index settled at 634.21 points.
Germany’s DAX index fell by about 0.7% to 24,723.31 points, Britain’s FTSE index dropped by about 0.1% to 10,414.83 points, and France’s CAC index remained stable at 8,340.69 points.
Crude oil prices traded near $76 a barrel, a level seen in early March, amid hopes that oil tankers stranded in the Gulf would be able to pass through the Strait of Hormuz following a peace agreement between Washington and Tehran.
Nevertheless, a state of caution prevailed in the markets as the two sides continued to disagree on the main terms of the agreement.
Traders are also awaiting clues about the monetary policy direction of major global central banks, at a time when data from the London Stock Exchange Group (LSEG) showed markets pricing in the likelihood of the European Central Bank implementing an additional 25 basis point increase in interest rates by the end of the year.
At the sector level, the aviation and defense sector led the losses on the Stoxx 600 index, declining by 1.7%, after shares of German Rheinmetall Group fell by 12.3% following a report indicating that Germany intends to cancel plans to build the largest warship since World War II, and instead purchase eight smaller frigates from its rival TKMS, whose shares rose by 8.7%.
In contrast, the real estate sector led the gains on the European index, rising by 2.4%, supported by a 17% jump in Segro shares after the US firm Prologis announced its $16.6 billion bid to acquire the British warehouse company, following an earlier rejection of the offer.
The technology sector also recovered, rising 0.3% after recording its biggest daily loss in nearly five months in the previous session, supported by a rebound in memory stocks in Asia and a 3.3% rise in South Korean stocks.
Shares of chipmaker Infineon rose 0.9%, while shares of BE Semiconductor and ASML each increased by 0.4%.
