European shares fell on Wednesday as renewed military tensions between the United States and Iran pushed oil prices higher, while investors held back from making bold bets pending the release of the minutes from the Federal Reserve meeting under its new chairman, Kevin Warsh.

The pan-European STOXX 600 index fell 0.6% in early trading, showing caution rather than outright panic.

Although the geopolitical escalation threatens the fragile peace agreement framework, markets have absorbed similar shocks in recent weeks without entering a structural spiral.

Germany's DAX index fell by 1%, while France's CAC 40 index lost 0.9%. The UK's FTSE 100 and Italy's FTSE MIB indices both recorded losses of 0.7%.

Rising oil prices are causing concern in the bond market.

The main pressure came from the energy market, where Brent crude jumped 2% to trade at $75.60 a barrel. This rise followed news of renewed clashes between US and Iranian forces, along with Washington's decision to withdraw a key waiver that had allowed Iran to export crude oil to global markets.

The Iranian Foreign Ministry was quick to warn that the US move represented a clear violation of the agreed framework aimed at formally ending the conflict.

While the decline in stocks remained limited, the bond market proved more sensitive. Rising oil prices fueled concerns that war-related inflation would persist longer than anticipated, pushing up Eurozone government bond yields and dampening appetite for riskier assets.

Workshop worker

Added to this is the state of anticipation that is weighing down trading volume, as people await the release of the Federal Reserve's June meeting minutes later this evening.

The minutes will provide the first detailed look at deliberations under the new Federal Reserve Chair, Kevin Warsh. Given Warsh's outspoken rejection of the forward-looking approach of his predecessors and his stated preference for less transparent communication, traders are deeply concerned about how the more opaque Fed will handle the consolidation of inflation expectations.

With nearly half of the Fed's policymakers indicating their openness to raising interest rates at the last meeting due to persistent price pressures, any hawkish tone in the minutes could lead to a broad repricing of global interest rate paths.

Shares of oil and gas giants such as Shell and BP rose by 1.6% and 2.3% respectively.