Europe close: Stoxx 600 hits four-month low as oil prices jump

(Sharecast News) - Inflationary concerns weighed on stocks again on Thursday in Europe, with the Stoxx Europe 600 falling to its lowest in four months on the back of surging oil prices and elevated bond yields.

The Stoxx 600 benchmark was 0.8% lower at 625.51, its lowest since 11 June, with heavy losses in Frankfurt and Milan in particular.

Front-month Brent crude futures were 4.5% higher at $104.76 a barrel, while WTI crude was up 4.7% at $92.46 a barrel, on fears that Donald Trump is preparing "massive" strikes on Iran.

According to Axios, the Pentagon instructed US Central Command several days ago to conclude preparations for resuming major combat operations in Iran. Reoprts suggest that potential strikes could happen before the US midterm elections in early November and possibly the Israeli elections a week earlier.

Investors were also digesting the attacks by Yemen-backed Houthis on two Saudi airports, alongside news of escalating strikes on commercial tankers in the Strait of Hormuz.

Meanwhile, prices were being lifted by fears that tropical storm Isaias, which was set to reach the US Gulf Coast by Friday, could disrupt US production.

Bond yields more or less stabilised on Thursday, though French 10-year OAT yield held close to their multi-year highs amid ongoing political uncertainty and social unrest, as lawmakers began scrutinising the government's contentious 2027 budget.

In economic news, Germany's exports slipped by an unexpected 0.8% in August, according to official data published on Thursday, as weaker demand across key markets weighed on monthly trade flows. After seasonal and calendar adjustment, outbound shipments continued to lose momentum following a modest rise in July. Analysts had forecast a 0.6% rise.

On the equities front, French banks fell as elevated bond yields hit demand for stocks in the sector, with BNP Paribas and Credit Agricole registering losses.

Shares in Tesco rose as the UK supermarket chain lifted annual guidance after interim earnings jumped 6.5%.

Belgian-Dutch pharmaceutical company Argenx slumped after a late-stage trial for its Sjögren's disease treatment failed to meet targets.