Despite spending much of the day's trading session in positive territory, most of the major markets in Europe closed on a weak note on Tuesday due to a sell-off in the final hour.
Markets gained in strength earlier in the day amid signs of US and Iran striking a peace deal soon, following Iran and Israel halting the strikes against each other.
Data showing an increase in Germany's industrial output in the month of April, and a faster pace of growth in exports contributed as well to the positive sentiment in the markets early on in the session.
However, with Israel continuing to hit targets in Lebanon, and the European Central Bank's (ECB) monetary policy meeting due on Thursday, the mood in the markets turned cautious and investors trimmed their positions towards the end of the session
The pan-European Stoxx 600 shed 0.5%. The UK's FTSE 100 tumbled 1.41% and Germany's DAX slid 0.74%, while France's CAC 40 edged up 0.05%. Switzerland's SMI gained 0.27%.
Among other markets in Europe, Denmark, Finland, Norway, Portugal, Spain, Sweden and Turkey closed weak.
Belgium, the Czech Republic, Greece, Iceland, Ireland, the Netherlands, Poland and Russia ended higher, while Austria closed flat.
In the UK market, mining, energy and bank stocks declined, contributing to the sharply lower close.
Croda International climbed about 4%. Bunzl, Entain, Coca-Cola Europacific Partners, Unilever, British Land, Land Securities, Coca-Cola HBC, Metlen Energy & Metals, Berkeley Group Holdings, Associated British Foods, Smith & Nephew and Haleon gained 1.3%-2.5%.
Standard Chartered shed 6.3%. Fresnillo lost 5.1%, while HSBC Holdings, Glencore, Prudential, St. James's Place, Endeavour Mining, BT Group, Antofagasta, BP, Weir Group, Bobcock International, Anglo American Pc, Rolls-Royce Holdings, Shell and Rio Tinto lost 1.8%-4.5%.
In the German market, Symrise climbed more than 7%. Henkel, Beiersdorf, Siemens Healthineers, Zalando, Fresenius Medical Care, Adidas, Munich RE, Commerzbank, Hannover RE, Heidelberg Materials, Allianz and Gea Group gained 1%-3%.
Siemens Energy tumbled nearly 6%. Infineon lost 3.3%. SAP, BMW, Siemens and Mercedes-Benz shed 1.3%-2%.
In the French market, EssilorLuxottica climbed nearly 4%. Kering moved up 2.5%, while Pernod Ricard, LVMH, Air Liquide, Danone, L'Oreal, Saint Gobain, Hermes International, AXA, Publicis Groupe and Michelin gained 1%-2%.
STMicroelectronics drifted down nearly 6%. ArcelorMittal lost about 4%. Schneider Electric ended lower by about 2.6%, while Telperformance, Capgemini, Stellantis, Veolia Environment, Legrand, Bouygues, TotalEnergies and Dassault Systemes shed 1%-2%.
In economic news, data from Destatis showed Germany's exports increased unexpectedly in April, rising 0.9% month-on-month following March's 0.3% increase. Economists had forecast exports to fall 0.3%. Meanwhile, growth in imports eased notably to 1.2% from 4.5%.
As growth in imports outpaced exports growth, the trade surplus fell to €14.5 billion ($16.74 billion) in April from €14.7 billion in March.
On a yearly basis, exports logged an increase of 3.6% compared to 6.6% in March. At the same time, imports advanced 6.3% after rising 10.4% in the prior month.
A separate data from Destatis showed Germany's industrial production rose 0.4% month-on-month in April, rebounding from a 0.1% drop in March. Annually, industrial production fell 0.5% in April, following a 3.4% drop in March.
Data from British Retail Consortium showed UK retail sales increased by 3.7% year-on-year on a like-for-like basis in May, exceeding market expectations for a 0.6% gain and marking the strongest growth since April 2025.
