Following recent declines, investors on European stock markets continued to show signs of nervousness on Wednesday.

The DAX and EuroStoxx50 each slipped slightly, settling at 23,403 and 5,285 points respectively. According to Thomas Altmann, portfolio manager at asset manager QC Partners, the primary concern for investors was the situation in the Middle East and whether the United States might actively intervene in the conflict between Israel and Iran. "We are far from panic, but there is a clear increase in uncertainty," Altmann noted.

Meanwhile, U.S. President Donald Trump intensified his rhetoric against Iran. On his social media platform, Truth Social, he called for the "unconditional surrender" of the Islamic Republic and warned that U.S. patience was running out. According to U.S. officials, the United States is deploying more fighter jets to the Middle East. Amid ongoing Israeli strikes, thousands of people have fled Tehran and other major Iranian cities.

After a sharp rise earlier in the week, oil prices eased slightly by midweek. Brent crude and U.S. light crude WTI both fell by about half a percent, to $76.06 and $74.50 per barrel, respectively. "Markets are trying to assess the risk of a major U.S. military intervention," said Joseph Capurso of the Commonwealth Bank of Australia. "It's hard to say exactly what the market is thinking, but if you look at oil prices and currencies, it's clear that at least some risk is being priced in that something very serious could happen."

WAITING FOR THE FED

On the currency markets, the dollar managed to hold on to most of its recent gains against other currencies. "The war has shown that the U.S. dollar still serves as a safe haven in certain situations, for example when the conflict raises the risk of disruptions to global oil supplies," said Thierry Wizman, currency strategist at Macquarie Group.

Investors' attention increasingly turned to the upcoming monetary policy decision from the U.S. Federal Reserve and its projections. The Fed is widely expected to keep interest rates steady, but markets are eagerly awaiting updated forecasts for the economy and the benchmark rate. Yields on U.S. government bonds remained stable in the run-up to the announcement.

AIRBUS AND GERRESHEIMER ON THE RISE

Among individual stocks, takeover speculation sent Gerresheimer shares up more than nine percent at their peak. The packaging manufacturer announced that KPS Capital Partners is continuing talks with Warburg Pincus regarding a potential acquisition. "Back and forth, back and forth--for now, it's positive news," commented one trader. KPS confirmed its interest at Gerresheimer's request. After a report suggested KPS had abandoned its takeover plans, Gerresheimer reached out to the financial investor for clarification. Gerresheimer has been seen as a takeover target for various financial investors for months.

The prospect of a higher dividend also attracted investors to Airbus, with shares rising by as much as four percent, making it one of the strongest performers in the DAX. The European aircraft manufacturer plans to increase its payout ratio to up to 50 percent, up from the previous target range of 30 to 40 percent, aiming to reward shareholders more generously. The world's largest passenger plane maker also reaffirmed its outlook for this year and signaled sustainable dividend growth ahead.

(Reporting by Stefanie Geiger; edited by Christian Götz. For questions, please contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and economics) or frankfurt.newsroom@thomsonreuters.com (for companies and markets).