A look at the day ahead in European and global markets from Gregor Stuart Hunter

Markets are in risk-off mode again as traders grapple with conflicting headlines: renewed fighting between the U.S. and Iran on one hand, a ceasefire between Israel and Lebanon on the other. But this time around, there's little sign of a relief rally.

Brent crude futures were just 0.7% lower at $97.12 a barrel after Lebanon and Israel agreed to implement a ceasefire, which is contingent on a complete cessation of fire from the Iran-aligned Hezbollah militia and the evacuation of all its operatives from the South Litani sector. The two sides had agreed last month to a ceasefire, but hostilities had continued.

Meanwhile, the Republican-led U.S. House of Representatives approved a war powers resolution to block President Donald Trump from continuing the conflict against Iran. The vote is largely symbolic and will also have to pass the Senate to become effective, then garner a two-thirds majority in both chambers to override an almost certain Trump veto.

But Trump has told aides privately that he would consider ending the ceasefire with Iran if Tehran kills American troops, the Wall Street Journal reported on Wednesday, citing U.S. officials.

S&P 500 e-mini futures are down 0.5%, on track for a second day of declines after hostilities in the Middle East erupted anew and talks between Tehran and Washington showed little progress. MSCI's broadest index of Asia-Pacific shares outside Japan was down 1.8%, while the Nikkei 225 slumped 2%.

In early European trades, pan-region futures were down 0.5%, German DAX futures sank 0.4% and FTSE futures were 0.4% lower.

Elsewhere, the yen strengthened away from the 160 level that many traders think marks authorities' unofficial intervention zone after flirting with that mark earlier this week.

On Thursday, the government said it expects the Bank of Japan to coordinate its policy steps with it, following hawkish comments from Governor Kazuo Ueda the previous day.

Some analysts think Tokyo's recent intervention in markets looks a lot better viewed over a two-decade horizon.

Key developments that could influence markets on Thursday:

Economic events:

Germany: HCOB Construction PMI for May

France: HCOB Construction PMI for May

UK: S&P Global UK Construction PMI for May, new passenger car registrations for May

Debt auctions:

France: 11-year, 12-year, 16-year and 31-year government debt