European stocks close with sharp monthly decline

The pan-European STOXX 600 index dropped 8% in March, snapping an eight-month run of gains and posting its biggest monthly loss since June 2022

European stocks ended Tuesday with ​their sharpest monthly decline in almost four years, underscoring the degree to which the Middle East war ‌has shaken equities.

The pan-European STOXX 600 index dropped 8% in March, snapping an eight-month run of gains and posting its biggest monthly loss since June 2022. For the first three months of 2026, the index has slid 1.5%, its first quarterly decline in five quarters.

The U.S.-Israel war against Iran has ​disrupted shipping in the vital Strait of Hormuz and driven up crude prices, aggravating inflation concerns across Europe, which relies heavily ​on energy imports.

The STOXX 600 index advanced 0.4%.

However, analysts say any gains remain vulnerable to swift reversals unless a ceasefire materialises.

We’re ​in oversold condition. That, coupled with this element of potentially encouraging news, has helped to shape the bounce that we’re seeing today, said Fiona Cincotta, senior market analyst at City Index, referring to the WSJ report.

However, we’ve seen this numerous times in recent weeks where there’s ​a comment from Trump which has been encouraging, only for that optimism to fade once again, she added.

All major ​ bourses advanced on the day but logged monthly losses. Swiss stocks added 0.9% after UBS Securities upgraded the index to “attractive,” citing lower valuations after ‌a more ⁠than 10% decline from its high.

Inflation in the euro zone rose to an annual rate of 2.5% in March, according to a first estimate from the European Union’s statistics agency.

While slightly below expectations, the increase has led to concerns that the unrelenting war would exacerbate price pressures.

The price at the pump is the main culprit, but also expect upside ​risk to food and goods ​prices given fertiliser shortages ⁠and broader supply chain problems stemming from the war, said Bert Colijn, chief economist for the Netherlands at ING.