European shares posted their biggest two-day slump in almost three months amid increased tension in the Middle East.

The Stoxx 600 slid 0.9 percent to 394.54 at the close of trading, as Saudi Arabia and its allies bombed rebels in Yemen. Shares pared losses of as much as 1.8 percent in the final hour of trading. The measure is on course for its largest weekly fall this year after climbing within 0.4 percent of a record. A gauge of energy producers reversed earlier gains as concerns over increased instability in the Middle East outweighed higher oil prices. A measure of auto stocks posted the only advance.

The Stoxx 600 rallied 18 percent this year through the end of last week on optimism that stimulus from the European Central Bank will revive the region’s economy. The attack on Shiite rebels in Yemen marks an escalation in tensions with Iran, which the world’s largest oil exporter blames for fomenting trouble in its southern neighbor. Oil climbed 3.1 percent, paring earlier gains of as much as 6.6 percent.

Airlines declined amid higher oil prices. International Consolidated Airlines Group SA slipped 3.4 percent, Deutsche Lufthansa AG retreated 2.9 percent and Air France-KLM Group lost 1.3 percent.

Source : Bloomberg