European stocks fall as Germany halves growth forecast, citing Iran war

LONDON — European stocks were lower on Wednesday as traders assessed the Iran ceasefire extension, economic updates and a flurry of corporate earnings.

By 1:52 p.m. in London (8:52 a.m. ET), the pan-European Stoxx 600 was down by 0.2%, paring gains seen earlier in the session. Sectors and major regional bourses traded in broadly negative territory.

German officials halved their economic growth forecasts for 2026, saying they now expected their domestic economy to grow by 0.5% this year. For 2027, the gross domestic product forecast was trimmed from 1.3% to 0.9%.

Citing the conflict in the Middle East and the de facto closure of the Strait of Hormuz, Germany's Economics Ministry said the country had seen costs for households and businesses rise. Against this backdrop, officials projected that the inflation rate will be 2.7% this year and 2.8% next year.

U.S. President Donald Trump on Tuesday extended the two-week U.S. ceasefire with Iran, saying the extension was warranted due to Tehran's government being "seriously fractured."

Trump said the ceasefire, which he earlier had said would end on Wednesday, would continue "until such time as" Iran's leaders and representatives submit a "unified proposal" to end the war with the U.S. and Israel.

The President's announcement came after reports that an expected trip by Vice President JD Vance to Pakistan for a second round of peace talks with Iranian officials had been put on hold.

Iranian state news outlet Tasnim also reported that negotiators from Tehran had informed their U.S. counterparts through an intermediary in Pakistan that they would not appear for further talks.

An Iranian diplomat later told the AP news agency that Tehran will not "negotiate under threat." He said the U.S. must end its blockade as a prerequisite for any further talks.

The diplomat told AP on Wednesday that the US must end its blockade on Iran as prerequisite for any further ceasefire talks in Islamabad. He also accused the U.S of using the ceasefire to build up more forces for possible resumption of military actions against the Islamic Republic.

Market sentiment was kept in check by Trump's refusal to lift the ongoing U.S. blockade of Iranian ports, with oil prices oscillating as investors tried to assess the situation.

He said in a Truth Social post: "They only say they want [the Strait of Hormuz] closed because I have it totally BLOCKADED (CLOSED!), so they merely want to 'save face.'"

Trump added that lifting the blockade would mean "there can never be a Deal with Iran, unless we blow up the rest of their Country, their leaders included."

Earlier in the day, the U.K.'s first inflation print covering the period since the Iran war began was released. The country's inflation rate jumped to 3.3% in March, official data showed, in line with economists' expectations and up from 3% the previous month. Officials said higher fuel costs had helped push the prices higher.

Suren Thiru, chief economist at the Institute of Chartered Accountants in England and Wales, said in a note following the data release that Trump's extended ceasefire deadline for Iran "won't prevent a painful period of accelerating inflation with skyrocketing energy costs and food prices likely to lift the headline rate above 4% by the autumn."

Among individual stocks, Dutch chipmaking equipment manufacturer ASMI topped the Stoxx 600 index after reporting first-quarter earnings after Tuesday's closing bell. Shares popped 6.5% after the company's quarterly revenue came in at 862.5 million euros ($1.01 billion), meeting the high end of its guidance and exceeding analysts' expectations. The firm also reported a record adjusted operating margin of 33.1%.

ASMI share price

Elsewhere, shares of recruitment giant Randstad jumped 4.6% after the firm published its first-quarter earnings update. Revenue rose 0.4% year-on-year to reach 5.51 billion euros in the three months to March, beating an analyst consensus estimate provided by the company.

"While geopolitical instability and limited visibility require us to remain vigilant, the trajectory in Q1 with 0.4% growth gives us confidence for the months ahead," CEO Sander van't Noordende said in a statement.

French beauty conglomerate L'Oreal will report on earnings after the trading session ends, while other companies reporting on Wednesday include ABB, EssilorLuxottica, and Danone.

— CNBC's Dan Mangan and Kevin Breuninger contributed to this market report.