LONDON, Jan 8 — European shares dropped today as an Iranian missile strike on US forces in Iraq saw investors fleeing risk assets amid rampant fears of a military escalation in the Middle East.

The recent strike raises the question of retaliation by the United States, with a statement from US President Donald Trump expected later in the day.

Iran said the strikes "concluded” its response to the US killing of one of its top military commanders last week.

The pan-European STOXX 600 equity index was down 0.5 per cent by 0807 GMT, with German stocks leading declines.

The chemicals subindex was the worst performer, while oil and gas stocks rose tracking higher crude prices on the prospect of supply disruptions in the Middle East.

Planemaker Boeing’s European suppliers, Senior Plc and Safran, fell after a Boeing 737 belonging to Ukraine International Airlines crashed after taking off in Iran. — Reuters