European stocks fall 0.5% as US-Iran ceasefire ends

European stocks fell on Tuesday as tensions rose following the expiration of a temporary ceasefire between the U.S. and Iran. The pan-European STOXX 600 index dropped by half a percent to 652.98, continuing a downward trend that began the previous day. Major indices reflected this decline, with Germany's DAX down 0.4 percent, France's CAC 40 slipping 0.6 percent, and the U.K.'s FTSE 100 remaining slightly lower.

The escalation in tensions comes after U.S. President Donald Trump announced he would not extend the ceasefire, while Iran indicated it is shifting to a "fully offensive" military strategy. This development has led to concerns over shipping safety in the region, particularly after a cargo vessel was reportedly struck by a projectile in the Strait of Hormuz, a vital waterway for global oil transport. As a result, Brent crude futures surged above $91 a barrel, and Euro zone long-dated bond yields reached multi-year highs.

In the U.K., the unemployment rate held steady at 4.9 percent for the June quarter, according to the Office for National Statistics. However, job vacancies decreased by 6,000 to 707,000 in the three months to July, indicating potential weaknesses in the labor market. Meanwhile, the U.S. dollar saw a slight uptick but remained near multi-month lows against other major currencies ahead of a range of economic data releases, including reports on import/export prices and housing starts.

In corporate news, Basilea Pharmaceutica's shares rose by 7 percent after the Swiss biopharma company raised its profit outlook for 2026, buoyed by a 77 percent year-on-year increase in first-half net profit. Conversely, HgCapital Trust's shares fell about 1 percent following its announcement of a £20 million investment in a nutritional consulting platform. Mining giant BHP experienced a modest increase in shares, reporting a 9 percent jump in annual net profit. The mixed corporate performance reflects broader market sentiments amid geopolitical uncertainties.