European stock markets closed largely flat on Tuesday, recovering from early session losses as traders weighed conflicting signals from Washington and the Middle East.
The Stoxx 600 and other major benchmarks ended the day close to their opening levels, reflecting a cautious stance amid diverging macroeconomic and geopolitical drivers.
The session was defined by a tug-of-war between risk-off sentiment stemming from escalating tensions involving Iran and risk-on impulses from softer-than-expected US consumer price data.
While the geopolitical backdrop kept energy and defense sectors under scrutiny, the cooling inflation print in the United States provided a counterweight, suggesting that the Federal Reserve may have more flexibility in its monetary policy path.
Market participants remained focused on the interplay between these two forces.
The US CPI data, which showed inflation pressures easing, helped stabilize sentiment after an initially volatile open.