The ‌pan-European STOXX 600 was down 0.5% at 652.94 points

European shares edged lower on Tuesday, hit by a rise in crude oil prices as hopes of a durable Iran-U.S. peace deal faded, ‌with surging euro zone bond yields adding to the pressure amid worries about persistent inflation.

The ‌pan-European STOXX 600 was down 0.5% at 652.94 points, as of 0849 GMT, on track for a fifth straight session ​of losses.

Iran will shift to a “fully offensive” military posture because efforts to negotiate a permanent end to the war with the U.S. have stalled, a senior Iranian official told Reuters on Monday.

Energy shares were up 0.3% as Brent crude jumped to almost $90 a barrel.

Higher ‌oil prices are closely watched in ⁠Europe, which remains heavily reliant on energy imports, as escalating Middle East tensions threaten to disrupt supply and drive up fuel costs, feeding inflation that raises ⁠operating expenses for businesses and weighs on consumer spending.

The bigger concern for Europe is natural gas. Markets are focused on whether Europe can replenish its gas storage at reasonable prices ahead of winter, with current inventory ​levels ​and costs remaining a key source of uncertainty, said ​Gordon Kerr, European macro strategist at KBRA.

Natural ‌gas prices rose 0.8% to $2.7 amid concerns that renewed Iran-U.S. tensions could disrupt energy supplies and keep fuel costs higher.

Technology stocks dropped the most, down 1.8%, after optical connectivity products maker Huber+Suhner slipped 5.7% following weaker-than-expected core profit and communications unit orders, putting the stock on track for its worst day since April 2025.

Basic resources were also down 1%, tracking lower gold prices as rising Treasury yields ‌dampened demand for the bullion metal.

Euro zone long-dated bond yields hit multi-year ​highs on fears that a prolonged Middle East war could drive inflation via ‌higher energy prices and increase defence-related borrowing. Germany’s ​10-year Bund yield reached ​its highest since 2011, while France’s 10-year yield hit a 16-year high.

Markets are increasingly focused on the prospect of higher government spending across Europe. Combined with inflation concerns, that is contributing ​to upward pressure on long-dated ‌bond yields, Kerr said.