March 18 (Reuters) - European shares extended their rebound on Wednesday as retreating crude prices boosted sentiment, while investors also awaited an interest rate decision from the U.S. Federal
European stocks retreat after attack on Iran's gas field revives concerns
Market Reaction and Key Developments
By Pranav Kashyap, Avinash P and Niket Nishant
March 18 (Reuters) - European shares halted their ascent on Wednesday after an attack on Iran's Pars gas field pushed oil prices higher and renewed fears of escalation in the Middle East, shattering the calm since the beginning of the week.
Stock Market Performance
The pan-European STOXX 600 declined 0.70% to 598.25 after gaining as much as 0.67% earlier in the session, ending a two-day winning streak.
Impact of the Iran Gas Field Attack
The attack on Pars was the first reported strike on Iranian energy infrastructure in the Gulf during the U.S.-Israeli war, and prompted Tehran to warn its neighbours that their energy installations would be targeted "in the coming hours".
"Up to now, energy infrastructure had been sort of off-limits. But this escalation brings back the risk that markets have been trying to forget," said Michael Brown, senior research strategist at Pepperstone.
"There is a degree of optimistic bias in the market because everyone is still expecting that we get some sort of U-turn from (U.S. President Donald) Trump, but what we've seen today is another wake-up call that it is not a given."
Investor Sentiment and Oil Prices
The market moves show how reactive investor sentiment remains to developments in the Middle East, undermining hopes that stocks may have found a floor, especially in oil import-reliant Europe.
Brent crude futures rose 4.75% to $108.33 a barrel, while U.S. West Texas Intermediate crude jumped 1.89% to $98.03.
Central Banks in Focus
CENTRAL BANKS IN FOCUS
Investors will also parse commentary from Federal Reserve Chair Jerome Powell on Wednesday, while European Central Bank President Christine Lagarde is scheduled to speak later in the week.
Interest Rate Outlook
Both central bank chiefs are expected to lay out their outlook for interest rates, which could offer investors fresh clues on positioning.
"They are going to try and be as non-committal as they possibly can. I don't think either of them is going to want to box themselves into a particular policy path at this point," Brown said.
Sector and Stock Highlights
Sector Performance
Consumer staples stocks slipped 2.72% and were the biggest drag on the benchmark, while healthcare companies also fell 2%.
Banks were insulated from the selloff, rising 1.22% for their third straight day of gains.
Notable Movers
Among individual movers, computer peripherals maker Logitech fell 6.07%. UBS downgraded the stock to "neutral" from "buy", while lowering its price target.
Diploma jumped 17.79% to a record high after it raised fiscal 2026 guidance.
(Reporting by Avinash P and Niket Nishant in Bengaluru; Editing by Janane Venkatraman and Maju Samuel)
