European stocks reversed early gains and closed lower on Tuesday as investors walked away of the highest risk assets minutes before Iran launched ballistic missiles against Israel.
The pan-European Stoxx 600 index .Stoxx fell 0.4%reversing its trend after rising up to 0.5% during the day.
A Stoxx volatility indicator .V2tx hit its highest level in more than three weeks. Most Stoxx sectors fell, with euro zone banks .Sx7e leading the losses, with a decrease of 2.8%.
Personal and household goods .Sxqp and retail trade.Sxrp rounded out the main declines, falling 1.7% and 1.3%, respectively.
The United States has indications that Iran is preparing to imminently launch a ballistic missile attack against Israel that could be at least as large as an attack Tehran carried out earlier this year, US officials said.
Bucking the trend, energy stocks .SXEP rose 1.3% after the increase of more than 3% in crude oil prices.
Defense companies such as the German Rheinmetall Rhmg.de and the Swedish Saab also rose 5.1% and 3.5%, respectively.
Eurozone public debt yields, which move inversely to prices, They extended their declines, as investors sought safe haven assets.
Yields had initially fallen after data showed euro zone inflation fell below 2% for the first time since mid-2021. in September, bolstering an already strong argument for a European Central Bank rate cut this month.
The real estate sector, sensitive to .SX86P rates, rose 1.1%, while the utilities sector .SX6P, which is often traded as a substitute for bonds, gained 0.4%.
Meanwhile, euro zone manufacturing activity fell in September at the fastest rate of the year, and the German manufacturing sector also fell. contracted at the fastest pace of the year, according to PMI data.
The French manufacturing sector continued to contract in September, while Italian manufacturing activity contracted for the sixth consecutive month in September.
Among other notable stocks, chemical products maker Covestro gained 3.8% after Abu Dhabi National Oil Company said it had reached a deal to buy the chemicals maker for 14.7 billion euros ($16.3 billion), including debt.
The US has indications that Iran is preparing a ballistic missile attack against Israel. Eurozone inflation falls below 2%, strengthening arguments for a rate cut.
Eurozone industrial activity worsens in September, according to the PMI. German manufacturing sector shrinks at fastest pace in a year, PMI says
