Europe Stocks Plunge Amid Escalating Middle East Tensions

European stocks declined on Tuesday, weighed down by rising oil prices and bond yields amid escalating Middle East tensions. The pan-European Stoxx 600 index fell 0.2% to 654.81 points, reflecting a broader sense of caution across global financial markets.

The shift in Iran's stance from defense to a 'full offensive' policy due to stalled US-Iran negotiations has raised concerns about potential disruptions to oil supplies and increased energy costs.

Brent crude rose 0.6% to $91.41 per barrel, while the energy sector posted a 0.6% gain in stocks. In contrast, basic resources shares declined 1% as falling gold prices dampened demand due to rising US Treasury yields ahead of the Federal Reserve's July monetary policy meeting minutes.

Rising bond yields across eurozone countries reached multi-year highs, with German and French 10-year bond yields reaching their highest levels since 2011 and 16 years respectively.