Europe's STOXX 600 extends rebound as investors weigh war risks, earnings (updated)
05/03/2026 10:22
Updates after markets close STOXX 600 closes 1.3% lower after early gains Three ECB policymakers warn of rise in inflation UK's Rentokil gains after higher annual profit Italy's Nexi plunges on plans to tackle sector challenges By Avinash P, Pranav Kashyap and Purvi Agarwal March 5 (Reuters) - European shares fell on Thursday after a sharp rebound in the previous session, as the Middle East conflict showed no signs of easing and more tankers came under attack, threatening higher oil prices and a knock-on effect on the global economy. The pan-European STOXX 600 .STOXX closed 1.3% lower, reversing an earlier gain of as much as 0.6%. The index recorded its strongest session in more than three months on Wednesday. Export-heavy industrial stocks .SXNP were the biggest drag on the index, down 2.4%. Siemens Energy ENR1n.DE fell about 6%, while defence stocks Rolls-Royce RR.L and Rheinmetall RHMG.De fell more than 5% each. The broader aerospace and defence index .SXPARO was down 4.2%, in its steepest one-day decline since April. The U.S.-Israel war with Iran entered its sixth day. The U.S. Senate blocked a motion aimed at halting the U.S. air campaign and more Gulf countries were being dragged into the conflict with no end to the disruption to energy infrastructure and shipping in sight. "It's becoming harder to see a quick resolution to the conflict in the Middle East and that in turn is forcing markets to look again at their interest rate expectations for the coming months," said Danni Hewson, head of financial analysis at AJ Bell. Banks .SX7E were down 1.7%, travel and leisure stocks .SXTP fell 1.8% and miners .SXPP dropped 3.8% as metal prices eased. "It's better to take a step back. If we don't have a clear and abrupt end to the conflict right now, we will continue to see this volatility extend into the next weeks," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. Europe remains heavily reliant on imported oil and LNG, and tighter supply conditions due to the war could push energy and transport costs higher, at a time when growth is already tepid. Three European Central Bank policymakers warned that euro zone inflation would likely rise, and growth sag, if the war sucks in more countries. Morgan Stanley projected the ECB will hold rates steady through 2026, pointing to the inflation risks stemming from the conflict. Rentokil Initial RTO.L jumped 10.7%, the biggest gainer on the STOXX 600, after the pest-control firm reported a 4% rise in annual adjusted pretax profit. German logistics group DHL DHLn.DE dropped 4.6% after reporting a 1.3% decline in fourth-quarter operating profit, weighed down by its freight-forwarding business. Italy's Nexi NEXII.MI sank as much as 22% to a record low after Europe's biggest payments group in terms of handled transactions outlined a three-year strategy to cope with mounting sector challenges. (Reporting by Avinash P and Purvi Agarwal in Bengaluru; Editing by Sherry Jacob-Phillips and Harikrishnan Nair, Kirsten Donovan) ((Avinash.P@thomsonreuters.com;))