European markets saw jittery trading on July 9, driven by escalating tensions in the Middle East following a series of strikes and counterstrikes between the United States and Iran. While equity markets broadly rebounded, London ended mixed. In bond markets, yields declined as crude oil prices stabilized, but lingering caution over geopolitical risks kept yields hovering near seven-week highs.
London Stock Market
London’s stock market closed mixed. The FTSE 100 extended its modest decline, falling 16.59 points, or 0.16%, to close at 10,472.45. The mid-cap FTSE 250 index rebounded after three sessions, gaining 0.97%.
As attention remained fixed on the Middle East, where the U.S. and Iran exchanged strikes and tensions flared anew, safe-haven assets like gold advanced. The FTSE 350 precious metals and mining index surged 4.06%, while the mining index jumped 4.09%. The banking index also firmed, rising 2.15%.
On the downside, the pharmaceuticals and biotechnology index tumbled 4.34%. Drugmaker AstraZeneca slumped 6.2% after disappointing late-stage clinical trial results for a treatment co-developed with a U.S. company triggered selling. The oil and gas index also fell 1.46%, pressured by lower crude oil prices.
Among individual stocks, gaming software company Playtech soared 14.1%, driven by buying on expectations of strong earnings. IT services provider Computacenter climbed 7.2% after forecasting full-year results ahead of market expectations.
European Stock Market
European equity markets rebounded after three consecutive sessions of losses. The STOXX Europe 600 index rose 4.96 points, or 0.78%, to close at 640.87. Tech and resource stocks led the advance even as tensions escalated between the U.S. and Iran. Spain’s IBEX index, which had fallen sharply the previous day, rebounded 1.14%.
Andrew Kenningham, chief Europe economist at Capital Economics, noted: “Since the start of hostilities with Iran, surveys have shown subdued business and consumer sentiment, but economic activity appears to be holding up well.”
The STOXX Europe 600 technology index surged 2.76%. Semiconductor-related stocks rallied broadly, with Germany’s Siltronic jumping 13.4%, France’s Soitec gaining 5.9%, and the Netherlands’ ASML Holding climbing 4.8%. The gains came amid reports that China may permit limited purchases of Nvidia’s H200 artificial intelligence chip, fueling expectations of expanding AI infrastructure demand.
The resource stock index rose 3.28%. Meanwhile, the healthcare index fell 0.90%. AstraZeneca, the British pharmaceutical giant, tumbled 6.2% — mirroring its London decline — after disappointing late-stage trial results for a co-developed neurological disease treatment.
German wind turbine manufacturer Nordex rose 4.8% after reporting solid order intake for the April-June 2026 quarter.
Major index closing levels are as follows:
IndexCloseChange% ChangeSTOXX Europe 600640.87+4.96+0.78%FTSE Eurofirst 3002,566.53+20.92+0.82%EURO STOXX 506,284.27+79.36+1.28%FTSE 10010,472.45-16.59-0.16%DAX25,118.27+220.82+0.89%CAC 408,326.62+73.96+0.90%
Eurozone Bonds
In eurozone bond markets, regional sovereign yields declined as crude oil prices stabilized. However, yields remained near seven-week highs amid concerns that the U.S.-Iran ceasefire agreement could collapse.
Crude oil prices had surged more than 5% the previous day after U.S. President Trump declared that the memorandum of understanding to end hostilities with Iran was “over.” On this day, prices posted only modest gains, with Brent crude futures recently trading 1% lower.
Germany’s 10-year Bund yield fell 2.5 basis points to 3.061%. It had briefly spiked 10 basis points the previous day, hitting its highest level since mid-May. Germany’s 2-year yield, which is sensitive to European Central Bank policy rate expectations, declined 4.2 basis points to 2.663%, after rising 12 basis points in the prior session.
Italy’s 10-year yield fell 5 basis points to 3.858%. The spread between Italian and German 10-year yields widened to 81 basis points, a level last seen in early May. France’s 10-year yield also declined 5 basis points. The Franco-German 10-year yield spread stood at 82 basis points, its widest since last October.
Foreign Exchange
In late European currency trading, the euro traded at $1.1438, the dollar at 162.28 yen, and the euro at 185.64 yen — levels largely unchanged from the late Asian session.
Market Context and Analysis
The day’s European market action was heavily swayed by headlines surrounding the Middle East situation. President Trump’s declaration on July 8 that the ceasefire memorandum was “over,” followed by a second wave of U.S. airstrikes on Iran’s southern coast, intensified risk-aversion in markets. However, on July 9, reports that Trump stated “Iran is very urgently seeking a deal” helped ease some of the excessive tension.
The heightened geopolitical risk drove inflows into safe-haven assets such as gold and government bonds, while creating a stark sectoral divide in equity markets. Resource and precious metals stocks were bought, while oil and gas shares — sensitive to crude price movements — declined. Additionally, the idiosyncratic shock of AstraZeneca’s clinical trial failure weighed on the broader healthcare sector.
The rally in semiconductor-related stocks was fueled by speculation that China may permit limited purchases of Nvidia’s H200 AI chip. Hopes for an easing of U.S.-China tensions translated into buying of European semiconductor equipment and materials makers such as ASML and Siltronic.
In bond markets, Middle East risks and the ECB’s monetary policy outlook continue to engage in a tug-of-war. Yields remain elevated on the view that prolonged high oil prices could reignite inflation and narrow the ECB’s room for rate cuts. The widening yield spreads of Italy and France over Germany also reflect market caution over fiscal risks within the eurozone.
Investors remain focused on developments in the Middle East, crude oil price trends, and scheduled remarks from senior ECB officials later this week.