European Stocks Close Lower As US-Iran Ceasefire Hopes Fade

FRANKFURT, June 2 (NNN-dpa-AFX) -- European stocks closed weak on Monday amid fading hopes for a United States (US)-Iran ceasefire, while inflation and interest rate concerns rose following a sharp rise in oil prices, dpa-AFX reported.

Oil prices climbed higher after Iran's state-affiliated news outlet Tasnim said Tehran will halt peace talks with the US and completely close the Strait of Hormuz in response to Israeli attacks in Lebanon.

Earlier, US Central Command said it conducted "self-defense strikes" on Iranian radar and command and control sites for drones in Iran over the weekend.

Investors also reacted to regional PMI readings, and largely stayed wary of picking up stocks at higher levels.

The pan European Stoxx 600 fell 0.76 per cent. The UK's FTSE 100 ended down by 0.68 per cent, while Germany's DAX and France's CAC 40 closed lower by 0.4 per cent and 0.45 per cent, respectively. Switzerland's SMI shed 1.75 per cent.

Among other markets in Europe, Austria, Czech Republic, Denmark, Iceland, Ireland, Poland, Portugal, Russia, Spain, and Sweden ended with sharp to moderate losses.

Belgium and Finland edged down marginally, while Greece, Netherlands, Norway, and Ukraine closed higher.

In the United Kingdom (UK) market, Persimmon, BAE Systems, Rolls-Royce Holdings, Babcock International, 3i Group, Barratt Redrow, and Convatec Group tumbled 4.0 to 5.4 per cent.

Kingfisher, Endeavour Mining, Pershing Square Holdings, Diageo, Haleon, Mondi, AstraZeneca, Howden Joinery Group, British Land, IAG, Bunzl, and Weir Group were among the several other notable losers.

The Sage Group surged nearly 8.0 per cent. Entain gained about 5.4 per cent, while Experian, Relx, and Glencore moved up 3.5 to 4.0 per cent.

Energy stocks BP and Shell gained 2.7 per cent and 2.5 per cent, respectively, riding on oil prices. Autotrader Group, RightMove, LSEG, Pearson, Sainsbury (J), IG Group. Tesco, Halma, and Rio Tinto also closed notably higher.

EasyJet soared more than 10 per cent on takeover interest. The budget airline called a potential £3 billion bid by a US investment group "highly opportunistic," adding any deal would face substantial hurdles.

In the German market, Rheinmetall fell 6.6 per cent. Bayer, MTU Aero Engines, Qiagen, Heidelberg Materials, Symrise, Daimler Truck Holding, Fresenius, Porsche Automobil Holding, and Hannover RE lost 2.0 to 4.0 per cent.

SAP surged more than 8.0 per cent. Scout24 gained about 3.0 per cent, while Brenntag, RWE, and Siemens moved up 1.0 to 1.5 per cent.

In the French market, Thales, Renault, Accor, Airbus, Kering, Safran, Saint-Gobain, Stellantis, and Pernod Ricard ended down 2.5 to 4.0 per cent. Veolia Environment, Bouygues, Sanofi, Vinci, EssilorLuxottica, and Societe Generale also closed notably lower.

Dassault Systemes jumped nearly 8.0 per cent and Capgemini surged 7.0 per cent. Publicis Groupe, Schneider Electric, Teleperformance, TotalEnergies, ArcelorMittal, and STMicroelectronics gained 1.0 to 2.5 per cent.

On the economic front, data from the federal statistical office Destatis showed Germany's retail sales dropped 0.3 per cent month-on-month in April 2026, matching the pace of a downwardly revised decline in the previous month and outperforming market expectations for a 0.4 per cent fall.

On an annual basis, retail sales slipped 0.2 per cent, following a downwardly revised 0.2 per cent decline in March, indicating that consumer demand remained subdued despite easing inflationary pressures.

Data from S&P Global showed Germany's S&P Global Manufacturing PMI was revised higher to 50.1 in May from a preliminary of 49.9, continuing to point to nearly stabilisation in the manufacturing sector.

Meanwhile, eurozone May final Manufacturing PMI reading came in at 51.6, dropping from 52.2 in April.

Data from Nationwide Building Society showed UK house prices declined for the first time this year amid high uncertainty over the developments in West Asia and its impact on inflation and market interest rates.

House prices dropped 0.6 per cent month-on-month in May, in contrast to the 0.4 per cent rise in the prior month, the data showed. This was the first monthly drop so far this year and also came in weaker than forecast of 0.1 per cent fall.

On a yearly basis, house price growth eased notably to 1.7 per cent from 3.0 per cent in the previous month.

Data from S&P Global showed the S&P Global UK Manufacturing PMI rose to 53.9 in May, compared with initial estimates and April's 53.7, marking the strongest expansion since May 2022.

-- NNN-BERNAMA-dpa-AFX