Europe midday: Shares slip into red as US-Iran talks cancelled

(Sharecast News) - European shares slipped into the red as Iran-US peace talks were cancelled after more exchanges of fire between Israel and the Iran-backed Hezbollah militia, while UK political turmoil around the future of Prime Minister Keir Starmer was also in focus.

The pan-regional Stoxx 600 index was down 0.09% to 636 at 1159 BST with most major bourses higher.

Britain's FTSE 100 fell on political uncertainty after Greater Manchester mayor Andy Burnham roundly defeated a challenge from two extreme far-right parties in a by-election, paving the way for him to launch a leadership bid against Prime Minister Keir Starmer.

Meanwhile, talks set to take place on Friday between the US and Iran in Switzerland on a peace deal were cancelled after Hezbollah killed four Israeli soldiers and Israel retaliated with airstrikes in south Lebanon that killed at least 18 people.

The negotiations were due to start after Washington and Iran signed a memorandum of understanding (MOU) that opened a 60-day window to agree a permanent arrangement on Iran's nuclear programme and reopening the vital Strait of Hormuz.

Oil prices rose on the news, with Brent crude up to $80 a barrel and West Texas Intermediate moved beyond $78.

"Market euphoria that a deal had been reached has shifted to some skepticism, as the deal is only interim and is not a peace treaty. There are also concerns about some aspects of the deal, including what it means for Iran's Gulf neighbors," said XTB research director Kathleen Brooks.

In equity news weapons makers gained on the Israel-Hezbollah hostilities, with Kongsberg, Leonardo and Hensoldt higher.

Reporting by Frank Prenesti for Sharecast.com