Europe midday: Middle East tensions hit sentiment as US attacks Iran

(Sharecast News) - European shares opened were lower on Tuesday as investors awaited the US midterm elections and assessed a report that Washington had launched limited strikes against Iran a day after officials said they were prepared to pursue a diplomatic resolution to the war.

The pan-regional Stoxx 600 index was down 0.47% to 646 at 1158 GMT with all major bourses lower.

Voters head to the polls in elections that will shape the final two years of US President Donald Trump's presidency. Democrats could take control of the House of Representatives while the Senate race is too close to call.

Trump has already indicated that he would use his veto powers on legislation if the Republicans lose control of Congress.

Meanwhile, reports emerged overnight that US forces launched limited strikes on Iran's Qeshm Island late on Monday, underscoring the fragile state of diplomatic efforts to end the conflict.

The operation came just hours after US vice-president JD Vance expressed optimism that negotiations with Tehran were moving in a positive direction.

Reports suggested the strikes were limited and targeted, focusing on military assets rather than signalling a broader escalation. Iranian media reported explosions on Qeshm Island, near the Strait of Hormuz, a critical route for global oil and gas shipments.

While concerns over major supply disruptions have eased in recent weeks, geopolitical tensions continue to provide support for oil prices. Brent crude rose 1.66% to $106.50 a barrel on the news.

The latest developments also come amid growing political scrutiny in the US, where higher energy costs - particularly at the petrol pump - have become an increasingly important issue for voters.

In equity news, shares in Lufthansa rose as the German flag carrier's third-quarter results met expectations. Zalando fell despite its results for the same period beating forecasts.

Bayer shares were up as the German conglomerate raised full-year earnings guidance, citing a rally in its pharma arm after strong demand for key drugs offset market pressures at its agricultural and consumer-health units.

Drax jumped 9% after the British power generator said it was joining forces with Brookfield and AI infrastructure platform Radiant to develop a data centre in a project that could attract more than £20bn.

Reporting by Frank Prenesti for Sharecast.com