The German DAX fell 1.1% to 25,194 points shortly after the market opened on Wednesday, marking a sharp reversal from its recent record highs.
The decline reflects growing investor caution as renewed military strikes between the United States and Iran have reignited concerns over Middle East stability and potential disruptions to global supply chains.
This downturn follows a session on Tuesday where the index already traded under pressure, dipping below the psychologically significant 25,000-point mark as investors digested a sharp rebound in oil prices.
The benchmark had previously closed above that level, but the fresh escalation has quickly eroded those gains.
Asian equity markets also opened with mixed signals, underscoring the broad-based caution spreading across global markets in response to the geopolitical flare-up.
The renewed tensions stand in stark contrast to the easing of supply fears seen earlier in July, when US-Iran talks and recovering traffic in the Strait of Hormuz had helped push oil prices to multi-month lows.