The Spanish IBEX 35 stock index unwound the gains made in the last month at the opening on Tuesday, with a cut of more than 1%, in the face of growing concern among investors about the escalation in the Middle East, which is making oil more expensive, and a less flattering interest rate outlook.

A stronger-than-expected increase in U.S. retail sales on Monday added to a flurry of signs that the cost of borrowing in the U.S. will fall much less than initially expected this year, if at all, in the face of surprisingly strong U.S. economic performance and persistently high inflation.

Fears that prices have stalled and will not continue their moderation were compounded by the appreciation of crude oil, amid fears that Israel and Iran could become embroiled in a war that would widen the conflict in Gaza and affect oil supply.

Israeli military have vowed to respond to the weekend's Iranian attack - which was not fatal and was in retaliation for a bombing of the Iranian consulate in Syria - despite international calls for restraint.

On Tuesday, the price of a barrel of Brent crude oil was up 0.39% and remained above $90, a level it had not touched since October 2023.

Nor did China's GDP, despite beating forecasts, contribute to the mood, due to new signs of serious problems in the country's real estate sector and reduced hopes that the authorities will introduce major economic stimulus plans.

Analysts at Renta 4 securities house pointed out that "for the rest of the day, the focus will be on leading cycle indicators, specifically the ZEW survey (in Germany, 0900 GMT) of financial analysts and institutional investors, which could continue to improve in April in both Germany and the Eurozone, in the heat of the expected start of ECB rate cuts on June 6 (90% probability)".

Spain's selective IBEX 35 stock market index responded to this context with a drop of 101.20 points, or 0.95%, to 10,586.00 points at 07:05 GMT on Tuesday, thus reaching its lowest level since March 14.

Meanwhile, the FTSE Eurofirst 300 index of large European stocks was down 1.26%.

The biggest fall was suffered by the steelmaker Acerinox, which lost 7.63% after receiving a cut in JP Morgan's recommendation, spreading to ArcelorMittal, which fell by 4.70%.

On the other hand, Naturgy gained 3.17% after it was reported in the press that the Abudabi state-owned company TAQA is in talks with the Spanish holding company Criteria about a possible acquisition of the Spanish energy company.

In the banking sector, Santander lost 1.54%, BBVA fell 0.79%, Caixabank gave up 1.32%, Sabadell fell 2.48%, Bankinter dropped 0.73%, and Unicaja Banco rose 0.78%.

Among the large non-financial stocks, Telefónica fell 0.18%, Inditex dropped 1.65%, Iberdrola dropped 0.53%, Cellnex fell 0.83%, and the oil company Repsol lost 0.38%.

(Information by Tomás Cobos; edited by Javi West Larrañaga)