STOXX 600 steady ahead of ECB policy decision

The pan-European STOXX 600 index was down 0.08% at 618.17 points

Europe’s STOXX 600 ended a choppy session little changed ​on Wednesday, as investors weighed a renewed flare-up in Iran-U.S. tensions ‌and looked ahead to the European Central Bank’s upcoming monetary policy decision.

The pan-European STOXX 600 index was down 0.08% at 618.17 points, ​closing lower for the fourth straight session.

Investor sentiment was also affected by a darker outlook for Europe’s largest economy. ​Germany is likely to slide into a technical recession this year as an energy-price shock linked to the Iran war derails its ‌fragile ⁠recovery, the DIW economic institute said, halving its 2026 growth forecast. The country’s main stock index declined nearly 1%.

Attention now turns to the ECB, whose two-day policy meeting began on Wednesday. The central bank is widely expected to raise interest rates by 25 basis points as it tries to contain the inflationary impact of higher energy costs. ​Markets will be focused on ​policymakers’ guidance for the ⁠rate path beyond this week.

Crude oil prices were higher and hovered near $93 a barrel after one of the biggest exchanges in hostilities between Iran and U.S. since the two countries agreed to a ceasefire in April.

Tehran said it would reassess diplomatic engagement with Washington, while the U.S. president said on Wednesday Iran had taken too long to negotiate a deal and would now have to ​pay the price.

What we ⁠are seeing today looks more like sporadic fire exchange rather than a broadening or restart of the wider ​conflict, Luca Bindelli, head of investment strategy at Lombard Odier, said.

Bindelli added that both Washington and Tehran have clear ​reasons to seek a deal, as a resolution could help Trump politically, while Iran is under pressure because large volumes of its oil remain stuck near the Strait of Hormuz due to the blockade.