European shares flat as US strikes on Iran dampen peace deal hopes

European shares were little changed on Tuesday after fresh U.S. strikes on Iran cooled expectations for an imminent peace deal and kept investors cautious about the Middle East conflict.

Reuters reported that the region's stock markets were subdued after the strikes, while oil prices firmed as traders reassessed the likelihood of a quick diplomatic breakthrough. The move followed an earlier session in which markets had risen on reports that talks involving Iran were progressing.

AP reported that U.S. forces struck targets in southern Iran and said the action was intended to protect U.S. troops. The latest strikes reversed some of the optimism that had built up a day earlier around the prospect of de-escalation.

The market reaction was mixed across regions, with investors weighing the risk of further escalation against the possibility that negotiations could still continue. Reuters said the fresh strikes reduced confidence in an imminent deal.

For now, the main market signal has been caution: European equities stayed flat, oil moved higher, and traders watched for further official statements from Washington and Tehran.