European Shares Seen Lower As Israel-Iran Tensions Escalate

(RTTNews) - European stocks may drift lower on Tuesday as the ongoing conflict between Iran and Israel took a dire turn, with significant casualties reported on both sides following days of strikes and counterstrikes between the two.

In light of escalating tensions, multiple countries, including India, the United States, Russia and the United Kingdom, have issued travel advisories for their citizens in the region.

Israeli PM Netanyahu compared Iran's nuclear program to cancer, vowing it must be "cut out."

He said Israel will destroy Iran's nuclear, missile, and terror infrastructure, with U.S. support and hinted the Iranian regime could collapse under pressure.

G7 leaders meeting in Canada on Monday affirmed, "Israel has a right to defend itself."

The joint statement added, "Iran can never have a nuclear weapon," and urged that resolving the crisis should lead to wider calm across the Middle East, including "a ceasefire in Gaza."

Iran launched a fresh wave of missiles toward Israel early in the morning, prompting the Israel Defense Forces (IDF) to issue a nationwide alert.

Traders also look for signs of progress on trade deals after the U.S. and Japan failed to react a trade deal at the G7 summit.

The U.S. and the U.K. have announced a deal on the sidelines of the summit, but the issue of steel and aluminum remains unresolved.

U.S. President Donald Trump's 90-day pause on "reciprocal tariffs" ends early next month, posing a risk to global economic stability.

Markets also look ahead to monetary policy decisions from the Federal Reserve and the Bank of England this week for direction.

Earlier today, the Bank of Japan kept interest rates steady and decided to decelerate the pace of its balance sheet drawdown next year.

On the data front, trading later in the day may be impacted by reaction to a batch of U.S. economic data, including reports on retail sales and industrial production.

Asian markets were broadly lower after Trump urged Iranians to evacuate Tehran, citing what he said was the country's rejection of a deal to curb nuclear weapons development.

The dollar index traded with mild losses and gold edged up slightly while oil prices rose nearly 1 percent on concerns about disruption to oil supply.

U.S. stocks rose sharply overnight amid hopes that the escalating conflict between Israel and Iran would remain contained.

The tech-heavy Nasdaq Composite surged 1.5 percent, the S&P 500 climbed 0.9 percent and the Dow rose 0.8 percent after Iran reportedly called on U.S. President Trump to force a ceasefire in the four-day-old aerial war and the Israeli military claimed its campaign has eliminated high-value targets.

European stocks recovered from an early slide to end higher on Monday amid optimism that the Israel-Iran conflict would have limited economic impact beyond the Middle East.

The pan-European STOXX 600 edged up by 0.4 percent. The German DAX and France's CAC 40 both gained around 0.8 percent while the U.K.'s FTSE 100 added 0.3 percent.