Europe urges calm, warns travelers as escalating Israel-Iran tensions rattle markets

BRUSSELS -- Israel launched a large-scale strike on Iranian military and nuclear targets early Friday, prompting swift retaliation from Tehran and escalating tensions in the Middle East.

The ripple effects are felt across Europe, where governments are grappling with renewed volatility in energy markets, disrupted air traffic, and mounting fears of a broader regional conflict.

CALLS FOR RESTRAINT

European Commission President Ursula von der Leyen described the situation as "deeply alarming" and urged all parties to "exercise maximum restraint, de-escalate immediately and refrain from retaliation."

French President Emmanuel Macron echoed those concerns, warning that the region's stability was at risk and calling for "maximum restraint." German Chancellor Friedrich Merz similarly urged caution and warned against any further destabilization.

British Prime Minister Keir Starmer appealed for all sides to "step back and reduce tensions," while Austrian Chancellor Christian Stocker stressed that "further escalation is the last thing this region needs."

In a phone call with Israeli Foreign Minister Gideon Sa'ar, Italian Deputy Prime Minister and Foreign Minister Antonio Tajani called for an immediate return to negotiations. Starmer has also called Israeli Prime Minister Benjamin Netanyahu, urging de-escalation and a diplomatic resolution to the conflict.

Dutch Prime Minister Dick Schoof added on X that "immediate de-escalation is essential in the interest of stability in the region."

IMPACT ON TRAVELS

As tensions escalated, several European governments updated their travel advisories and airlines began scaling back operations in the region.

France's foreign ministry urged citizens to avoid all travel to Iran and Israel, advising those already there to remain extremely vigilant. Romania and the Czech Republic issued similar warnings, with Prague specifically urging its nationals to leave Iran amid fears of further military strikes.

Meanwhile, flight disruptions spread rapidly across Europe. Multiple carriers suspended services to affected areas throughout Friday. According to Eurocontrol, around 1,800 Europe-bound or outbound flights were impacted, including approximately 650 cancellations.

France suspended all commercial flights to Iran and Israel, while Dutch airline KLM canceled its Friday service from Amsterdam to Tel Aviv.

Germany's Lufthansa extended its suspension of flights to Tehran through July 31 and broadened its no-fly zone to include Tel Aviv, Amman (Jordan), Erbil (Iraq), and Beirut (Lebanon).

The Lufthansa Group said all affiliated airlines -- Swiss, Austrian, Brussels Airlines, and Eurowings -- would avoid Iranian and Israeli airspace until further notice.

In the Czech Republic, Prague Airport canceled all Tel Aviv departures and arrivals for Friday and Saturday, citing security risks.

The growing airspace restrictions also affected official missions. Polish President Andrzej Duda's return flight from Singapore was delayed due to regional airspace closures.

Meanwhile, Lithuania, preparing for a possible evacuation of citizens from Israel, reported a Tel Aviv-bound flight cancellation and began assessing alternative evacuation routes, according to Vilmantas Vitkauskas, head of the country's National Crisis Management Center.

VOLATILE MARKETS, RISING ECONOMIC FEARS

European markets slumped on Friday as Israel's strike on Iran rattled investor confidence and deepened global risk aversion.

The pan-European STOXX 600 index fell 0.89 percent to 544.94 points by 1800 GMT, hitting a three-week low and extending losses for a fifth straight session, the longest losing streak since September 2024.

Every sector except oil and gas closed in negative territory, with travel and leisure stocks leading declines with a sharp 2.6 percent drop. Major indices across the continent posted losses, with Germany's DAX suffering the steepest decline at 1.5 percent.

Economists warned that continued escalation between Israel and Iran could further damage investor sentiment and undermine the already fragile recovery in the eurozone.

The Israel-Iran situation may currently be felt in Europe mainly through rising prices driven by surging energy and oil costs, Peeter Koppel, head of investments at Estonia's Redgate Wealth, said in comments to local media.

He cautioned that a more severe economic impact could follow if Iran blocks maritime traffic through the Strait of Hormuz, a critical global oil transit route.

Carsten Brzeski, head of macro research at ING, said a significant escalation could erode consumer and business confidence across the euro area, dragging down demand and investment.

Over time, the combination of elevated energy prices and prolonged uncertainty could introduce a "stagflationary element" to the eurozone outlook, Brzeski warned, a scenario in which high inflation and weak growth become entrenched.