European energy, defense firms rise amid escalating Middle East tensions

Investing.com — European energy and defense stocks moved higher on Wednesday, although investors remained broadly cautious due to ongoing violence in the Middle East.

The pan-European rose 0.3% to 522.46 points, as of 04:18 ET (08:18 GMT). Meanwhile, the in Germany traded 0.2% higher, the in France rose 0.5% and the in the U.K. climbed 0.4%.

The wider energy sector provided the most uplift to European stocks, adding over 1% following a spike in oil prices that stemmed from fears that an escalation in tensions in the Middle East may dent supply coming out of the oil-rich region.

London-listed shares in Shell (LON:) and BP (NYSE:) added 2.7% and 2.6%, respectively, while TotalEnergies (EPA:) in France climbed by 3.2%, Italy’s Eni SpA rose by 2.8% and Repsol (OTC:) in Spain increased by 2.2%.

Defense firms, including Germany’s Rheinmetall, Saab in Sweden Saab and BAE Systems (LON:) edged up by between 1% and 3%.

Iran has said that its aerial barrage on Israel — its largest ever on the country — is over, but warned it would resume the attack if there are further provocations.

Israel could launch a “significant” response in the coming days that may target oil output facilities inside Iran and other strategic sites, according to US news website Axios.

Israeli Prime Minister Benjamin Netanyahu has promised a retaliation to Tehran’s airstrikes, saying in a statement on Tuesday that Iran “made a big mistake” and “will pay for it.”

The US has also said there will be “severe consequences” for Tehran’s actions, with Defense Secretary Lloyd Austin adding that Washington is “well-postured” to defend its interests in the Middle East.

Iran’s assault was sparked by recent attacks by Israel on Lebanon-based Hezbollah as well as the ongoing war in Gaza, Tehran said. The US, the United Nations and European Union have called for a ceasefire in Lebanon, but fighting continued there early on Wednesday.