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European Stocks Pause Rally as Middle East Negotiations Dominate Trading

European equities retreated Tuesday after a six-day winning streak. Traders assessed the trajectory of U.S.-Iran peace discussions and their implications for energy markets and broader economic stability.

The pullback reflected investor caution despite signals that negotiations were progressing. U.S. military strikes against Iranian targets pushed crude oil higher, creating conflicting signals about the likelihood of an imminent settlement.

Meanwhile, Treasury yields rallied on expectations of a swift Middle East resolution, offering some support to broader markets. American equity futures extended gains on the same optimism.

European Central Bank officials signaled readiness to proceed with planned rate increases in June regardless of geopolitical developments, maintaining focus on domestic inflation concerns even as global tensions remained elevated.