Europe midday: Shares lower on Iran-US tensions

(Sharecast News) - European shares were lower and oil prices rose on Monday as the US and Iran continued military exchanges on vessels in the Strait of Hormuz.

The pan-regional Stoxx 600 index was down 0.07% to 649 at 1103 GMT. Investors are eyeing US inflation data on Friday in a reading that is expected to determine whether the Federal Reserve hikes interest rates at its meeting next week.

"With various members of the Fed and indeed Chairman Warsh at Jackson Hole sounding hawkish warnings with inflation in mind, the report takes on added significance ahead of the rate decision next week," said Interactive Investor head of markets Richard Hunter.

"It is expected to show that prices rose by 3.4% last month, which would be unchanged from July, but which would also remain some way above a 2% target which has now been elusive for more than five years."

"As such, any signs of disinflation - prices still rising but at a lesser rate - would be welcomed by equity investors in particular, even as rising energy prices provide a stiff headwind."

Germany's DAX fell 0.3% after the extremist AfD party topped state elections in Saxony-Anhalt with 44% of the vote, although it fell short of `an overall majority.

Sentiment was lifted slightly after revised data showed the eurozone economy grew more than expected in the second quarter of 2026.

GDP in the 21-country eurozone expanded by 0.6% between April and June, up from the 0.4% previously estimated.

In the Gulf, US forces struck three Iranian oil tankers on Saturday, including one near Kharg Island close to Iran's main oil export hub, according to US Central Command. The action marked a fresh escalation in maritime tensions as Washington seeks to curb Iran's ability to move oil through the region.

Iran's Islamic Revolutionary Guard Corps said its navy had targeted three tankers it claimed were travelling on unauthorised routes in the Strait of Hormuz, along with three additional US vessels in other areas.

The news sent oil prices higher, with Brent crude up 0.52% to just over $96.78 a barrel.

In equity news, chipmakers and related stocks were in favour with BE Semiconductor, Infineon, ASM International and STMicroelectronics all up.

Novartis shares fell after the Swiss pharma giant's treatment to reduce cardiovascular risk failed in a late-stage clinical trial.

Lottomatica rose after the Italian betting company provided more details on how its proposed merger with Spain's Cirsa would boost its online business. Cirsa shares rose 7%.

Reporting by Frank Prenesti for Sharecast.com