French stocks have experienced a significant decline on Tuesday, furthering the considerable losses from the previous session, as escalating tensions in the Middle East drive investors to retreat from riskier assets like equities. Growing worries regarding inflation, coupled with U.S. President Donald Trump’s remarks that the conflict might endure for approximately four to five weeks, and his assertion that the U.S. possesses the “capability to go far longer than that,” heavily impact sentiment.

In an interview, economist Philip Lane has cautioned that a prolonged conflict in the Middle East, coupled with a continued decline in oil and gas supplies from the region, could lead to a “substantial spike” in inflation and a “sharp drop in output” in the euro zone. France’s benchmark CAC 40, which fell to 8,119.79 earlier in the session, was down 236.99 points or 2.81% at 8,157.33 just before noon. Among the constituents of the benchmark index, only Capgemini is trading in positive territory, with an increase of 0.25%.

Accor has experienced a decline of 6%, furthering the significant drop from the previous session. Societe Generale is experiencing a decline of nearly 6%, while Engie and ArcelorMittal have fallen by 5.7% and 5.6%, respectively. STMicroelectronics, Unibail Rodamco, Renault, BNP Paribas, Kering, Saint Gobain, Credit Agricole, Veolia Environment, Eiffage, Stellantis, AXA, Legrand, Schneider Electric, Safran, Vinci, L’Oreal, LVMH, Bureau Veritas, Carrefour, Michelin, and Thales have experienced declines ranging from 2.6% to 5%.

In economic news, data indicated that the annual inflation in the Euro Area increased to 1.9% in February 2026, rising from January’s 16-month low of 1.7% and surpassing market expectations of 1.7%, based on a preliminary estimate. Among the bloc’s largest economies, the Harmonised Index of Consumer Prices saw an acceleration in France (1.1% from 0.4%), Spain (2.5% from 2.4%), and Italy (1.6% from 1.0%), while experiencing a slight easing in Germany (2.0% from 2.1%).