European stocks slip as Middle-East flare up triggers oil uptick

 European stock markets slipped on Monday as an intense flare-up in Middle East hostilities sent investors fleeing from risk assets, compounded by Iran’s declaration that the vital Strait of Hormuz shipping lane has been closed.

The benchmark pan-European STOXX 600 index fell 0.2% in early trading, tracking similar losses across all major regional bourses. Germany’s DAX shed 0.3%, France’s CAC 40 dropped 0.2%, and London’s FTSE 100 gained 0.2%.

Europe’s major oil and gas producers, such as Shell and BP gained 1.8% and 2.7%, while TotalEnergies rose 2.3%.

The selloff followed the breakdown of a fragile truce over the weekend. Iran’s Revolutionary Guards announced the closure of the Strait of Hormuz “until further notice” following an attack on a commercial vessel and subsequent U.S. military retaliatory strikes.

While the U.S. Central Command countered that the waterway remains open to lawful transit, the threat of an outright blockade along a channel responsible for a fifth of the world’s seaborne oil sent energy markets into overdrive.

Global oil benchmarks Brent crude and West Texas Intermediate both surged more than 4.4%.

The downturn marks a reversal from last week’s performance, where European shares had managed to claw background. Tech stocks and chipmakers had driven a late-week rally, supported by temporary hopes of diplomatic progress and resilient global demand for artificial intelligence infrastructure.

However, those hard-fought gains were poised to erased should losses extend.

European Central Bank (ECB) Executive Board member Isabel Schnabel is scheduled to speak later in the day.

Investors will be parsing her remarks closely for any fresh guidance on the future path of interest rates, particularly given Schnabel’s established reputation as one of the central bank’s more hawkish policymakers who has consistently favored a cautious approach to cutting borrowing costs.

Among individual stocks, Akzo Nobel rose 3% after Nippon Paint’s offer for the paint maker’s decorative paints business.