STOXX 600 Ends Flat Amid Middle East Tensions

Europe's STOXX 600 closed flat as investor risk-aversion increased due to Middle East conflicts. Despite this, energy shares advanced. Defence stocks rose while utilities declined. Other highlights include euro zone unemployment remaining low and Citigroup predicting ECB rate cuts in upcoming meetings.

Europe's STOXX 600 ended flat on Wednesday as investors shied away from risk amid escalating conflicts in the Middle East. However, a rise in energy stocks helped curb potential losses.

Closing at 521.14 points, the pan-European STOXX 600 remained stable after fluctuating near flat levels throughout the session. The energy sector gained 1.6%, marking its best performance in over eight weeks, fueled by rising oil prices following Iran's missile attack on Israel and ensuing pledges of retaliation from both Israel and the U.S.

Defence companies also saw gains, with Germany's Rheinmetall and Britain's BAE Systems both rising over 1%, and Sweden's Saab surging 2.5%. Conversely, Euro area government bond yields increased a day after their largest daily drop since mid-June, and utilities, often seen as bond proxies, fell 1.6%, leading declines among major STOXX sectors. Data showed euro zone unemployment at 6.4% for August, aligning with analyst forecasts despite the sluggish economy. ECB Vice President Luis de Guindos noted that near-term euro zone growth might be weaker than expected, though recovery should accelerate later. Citigroup now predicts the ECB will cut interest rates by 25 basis points in its October meeting, with further cuts expected into 2025. Meanwhile, Britain's JD Sports Fashion fell 6.1% after Nike withdrew its annual outlook, despite reporting a first-half profit beat. Volvo Cars saw a year-on-year sales rise of 1% in September but its shares slipped 6.6%.

(With inputs from agencies.)