European shares close near three-week low

The pan-European STOXX 600 dropped 0.4% to 606.58 points

European shares closed near a ​three-week low on Tuesday as mixed corporate earnings, uncertainty over the Middle East war, ‌and caution ahead of central bank decisions later this week weighed on sentiment.

The pan-European STOXX 600 dropped 0.4% to 606.58 points. Most major regional markets closed lower, with Frankfurt’s DAX down 0.3%, its seventh straight ​session of declines and the longest such streak since 2024.

Investors will ​thus closely monitor this week’s European Central Bank and Bank of England’s meetings for cues on growth, inflation and outlook on interest rates. Market participants are also tracking how the Iran war is affecting companies’ outlook as ​they report earnings.

We’ve rallied a very long way without a significant pullback and there is a ​danger if the central banks play up inflation and high energy costs and hint at rate hikes rather ‌than ⁠keeping things on hold. That could be a trigger for a bit more of a selloff, said David Morrison, senior market analyst at Trade Nation.

Optimism surrounding technology and AI has helped world markets rebound from a sharp selloff in March, but energy-dependent European equities still remain ​below pre-war levels.

European tech stocks ​slipped 1.9% on ⁠Tuesday amid growing scepticism on whether the AI boom would translate into growth.

Barclays pared earlier losses, ending 0.2% lower ​after the British bank flagged a $308 million hit linked to collapsed lender MFS.

The ​broader banking ⁠index, however, added 1.3%, helping curb losses on the STOXX index.

The energy index was up 0.6%, lifted by BP, which advanced 1.1% after it beat first-quarter profit estimates.

Meanwhile, a key ECB survey showed Euro zone consumers sharply raised their inflation expectations in ⁠March.