Europe is particularly vulnerable to surging crude prices
European shares snap win streak as Middle East conflict fans inflation worries
European shares ended a three-day winning streak on Thursday as hopes of an imminent de-escalation in the Middle East conflict faded, prompting traders to reassess their interest rate expectations.
The pan-European STOXX 600 index fell 1.2% to 580.59 points, with miners and defence shares among the biggest laggards.
A senior Iranian official told Reuters that the U.S. proposal for ending the war was "one-sided and unfair."
The share moves this week suggest equities could remain under pressure as long as the war, now in its fourth week, grinds on. Hopes for a swift end to the conflict have proven premature so far, and investors doubt if even a ceasefire would immediately restore energy flows to pre-war levels.
Europe is particularly vulnerable to surging crude prices as the Strait of Hormuz remains shut, fanning inflationary and growth concerns.
ECB policymaker Joachim Nagel told Reuters that an April rate hike was "an option," a day after President Christine Lagarde said the central bank was prepared to act at any meeting to keep inflation at its 2% target.
