European equities closed lower on Wednesday, weighed down by geopolitical friction between Washington and Tehran as President Donald Trump was reportedly weighing expanded military action against Iran while Tehran threatened to keep the Strait of Hormuz closed until U.S. aggression ceases. The pan-European STOXX 600 fell 0.4% to 638.83 points, with Madrid the weakest major bourse at -0.65%, Frankfurt down 0.6%, and Milan off 0.4%.
Commodities reflected the tension: WTI crude rose nearly 1% to $80.13 a barrel while natural gas climbed 3%. Gold edged up to $4,027.65 an ounce. European utilities led sectoral losses at -1.1%, while luxury names outperformed — Richemont surged 5.7% after quarterly results and Kering gained 3.4%.
In M&A activity, ABB fell 3.3% after announcing a $5.5 billion takeover of Rotork, whose shares soared 66%. Delivery Hero dipped after Uber launched a $14.8 billion public takeover bid. In Milan, Banca Monte dei Paschi di Siena's board met to evaluate an offer from Intesa Sanpaolo. Italian bond yields rose, pushing the BTP-Bund spread near 78 basis points.