Europe midday: Shares trim gains as Iran war worries persist; Bechtle slumps

(Sharecast News) - European shares trimmed morning gains on Friday but were still set for their third weekly decline in a row as the US-Israel war on Iran escalated across the Gulf, sending oil and gas prices higher and increasing the prospect of interest rate hikes across the globe.

The pan-regional Stoxx 600 index rose 0.28% to 585.34 points at 1205 GMT but was down 1.90% so far this week and 7.30% lower for the month.

Energy prices remained elevated, with benchmark Brent crude at $107 a barrel and month-ahead gas on the Dutch exchange at €60.15 per kilowatt hour. Oil fell slightly on Friday after US Treasury Secretary Scott Bessent said Washington may lift sanctions on Iranian crude stored aboard tankers in a bid to bring down costs.

After Israel bombed Iran's massive South Pars gas field - the largest in the world - Tehran responded by attacking Kuwaiti and Qatari production facilities.

Bets are increasing on an interest rate rise by the European Central Bank after policymakers voted for no change on Thursday. However, they warned that the conflict had created "upside risks for inflation and downside risks for economic growth".

Australia lifted its cash rate this week, while Sweden, Switzerland, Japan, the UK and US have decided to hold for now, but all have warned of the upside risk to inflation as fuel costs start to rise on constrained supply.

"A week packed with war headlines and central bank decisions comes to an end with one clear conclusion: the Middle East conflict is intensifying, and no one knows what the right monetary policy response should be," said Swissquote Bank analyst Ipek Ozkardeskaya.

"What everyone agrees on is that rising oil and energy prices will push inflation higher in the short to medium term-depending on the duration of the conflict-while weighing on growth. This is a message echoed by the major central banks around the world."

In equity news, shares in Smiths Group fell after full-year profits fell and the company said it would return an extra £1.5bn to shareholders once the sale of its detection unit is complete.

Unilever gained as the consumer goods conglomerate confirmed it was in talks with US-based McCormick about selling its foods business.

Bechtle shares slumped as the IT services provider warned on the critical supply situation for memory chips.

Reporting by Frank Prenesti for Sharecast.com