European shares retreated on Tuesday, led by declines in defence and healthcare stocks, as investors turned cautious ahead of U.S. President Donald Trump’s deadline for Iran to reopen the Strait of Hormuz.

Oil prices edged up past $110 per barrel with both U.S. and Tehran showing no signs of reaching an agreement, while strikes on Iran intensified.

The STOXX 600 index .STOXX ended down 1% at 590.59, giving up earlier gains. Trading resumed after Europe’s extended Easter weekend, which included the Good Friday and Easter Monday holidays.

Most regional bourses also traded in negative territory, with Germany’s DAX .GDAXI falling 1%, while Britain’s FTSE 100 .FTSE was off 0.8%.

“The situation has evolved into a near-term binary outcome: either escalation through direct strikes on Iranian infrastructure, or a last-minute de-escalation that could trigger a sharp reversal in risk assets,” said Daniela Hathorn, senior market analyst at Capital.com.

“For now, the absence of a clear path forward is keeping markets volatile and indecisive.”

The U.S.-Israeli war with Iran has rattled global markets and sent oil prices soaring, with the STOXX 600 declining more than 5% since the conflict began over a month ago. Tehran’s effective closure of the strait has stoked inflation concerns and shifted monetary policy expectations.

Despite hopes for a diplomatic breakthrough, negotiations have so far failed to yield progress. Trump has imposed a deadline of 8 p.m. ET Tuesday (0000 GMT Wednesday) for a deal to be reached.

Among sectors, aerospace and defence .SXPARO dropped 2.4% with Italy’s Leonardo LDOF.MI falling 8% after sources told Reuters CEO Roberto Cingolani could be replaced. Britain’s Rolls-Royce RR.L and Germany’s Rheinmetall RHMG.DE lost 3.9% and 2.5%, respectively.

Healthcare .SXDP fell 2.1% with Novo Nordisk NOVOb.CO and AstraZeneca AZN.L off 0.8% and 2.3%, respectively.

Information technology .SX8P stocks lagged, with semiconductor equipment leader ASML ASML.AS falling 4.1%, after a cross-party group of U.S. politicians proposed a law to impose further restrictions on exports of computer chipmaking equipment to China.

Media shares .SXMP were a bright spot, gaining 3.7% as Universal Music Group UMG.AS soared 11.4% after Pershing Square PSHP.Lproposed a cash-and-stock takeover valued at about 55.75 billion euros ($64.31 billion).

On the monetary policy front, ECB policymaker Dimitar Radev warned that inflation expectations could rise faster than in the past and said the central bank must be prepared to raise rates swiftly if price pressures persist.

Traders are now pricing in about three rate hikes by the end of the year, according to LSEG data.

Meanwhile, euro zone PMI figures showed private sector expansion weakened sharply in March as the Middle East conflict drove up energy costs and disrupted supply chains, with overall demand falling for the first time in eight months.