European shares near one-week lows

The pan-European STOXX 600 index slid 0.7% to 636.52 points

European shares were near one-week lows on Tuesday, ‌as escalating Iran-U.S. tensions spooked investors, who scrutinized quarterly earnings from companies such as oil major BP and telecom equipment maker Ericsson to gauge the impact of the war on corporate health.

The pan-European STOXX 600 index slid 0.7% to 636.52 points by ​0835 GMT. Travel and leisure dropped 2.6% and led a broad-based sectoral decline. Energy price-sensitive airlines ​Air France and Lufthansa shed more than 2% each.

Brent crude prices shot up 3% to $85 ⁠a barrel after Iran and U.S. carried strikes against each other and the U.S. president announced a blockade of Iranian shipping and a 20% fee on cargo transiting the Strait of Hormuz.

The move ​is the latest complication that companies and investors will have to consider as they gauge the health of the economy and corporate outlook for the rest of the year, just weeks after a Mideast agreement seemed to end hostilities.

The optimism that was ​there in markets has been given a nasty check because of the resumption of possibilities and the worry ​that this is going to be a replay of something like what we had in March, said Chris Beauchamp, chief ‌market analyst ⁠at IG Group.

Ericsson dipped 8% after the Swedish telecom equipment maker’s quarterly sales slightly missed estimates and it warned of rising component costs.

On the flip side, London’s BP benefited from the surge in oil prices earlier this year. Shares of the oil company advanced 1.6% after it said its oil trading results are expected to be slightly ​higher in the second quarter.

Inflation ​concerns prompted investors to ⁠ramp up bets on the likelihood that the European Central Bank will hike interest rates by at least one more 25 basis points by as early as ​September, LSEG-complied data showed.

European shares have also been bogged down by concerns about tech ​sector valuations. ⁠Tech giant ASML’s results later this week could offer clues on the outlook for AI-driven demand.