Aug 18 (Reuters) – European shares edged lower on Tuesday as crude prices rose after hopes for a lasting U.S.-Iran peace deal faded, while surging euro zone bond yields added to pressure on equities amid worries about persistent inflation.
The pan-European STOXX 600 was down 0.2% at 654.81, as of 0703 GMT.
Iran will shift to a “fully offensive” military posture because efforts to negotiate a permanent end to the war with the U.S. have stalled, a senior Iranian official told Reuters on Monday, as Washington ruled out extending a temporary ceasefire agreement.
Energy shares rose the most, up 0.6% as Brent crude climbed around 0.6% to $91.41 a barrel. [O/R]
On the flip side, basic resources fell the most, down 1%, tracking lower gold prices as rising Treasury yields dampened demand for the bullion metal ahead of the release of minutes from the U.S. Federal Reserve’s July policy meeting. [GOL/]
Euro zone long-dated bond yields hit multi-year highs on fears that a prolonged Middle East conflict could fuel inflation via higher energy prices and increase defence borrowing. Germany’s 10-year Bund yield reached its highest since 2011, while France’s 10-year yield hit a 16-year peak.
(Reporting by Tharuniyaa Lakshmi in Bengaluru; Editing by Rashmi Aich)
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