London: European stocks ended Tuesday with sharp losses as escalating tensions in the Middle East continued to dampen the global risk appetite. The pan-European Stoxx Europe 600 index fell 3.08%, or 19.19 points, to close at 604.44.
According to Anadolu Agency, Germany's DAX 40 was down 3.44% at 23,790.65, while the UK's FTSE 100 index lost 2.75% to 10,484.13. France's CAC 40 index dropped 3.46% to 8,103.84 points and Italy's FTSE MIB 30 fell 3.92% to 44,468.46. Spain's IBEX 35 also decreased 4.55% to end the day at 17,062.4.
President Donald Trump announced on Tuesday that all trade with Spain would be halted after Madrid prohibited the US from using bases on its territory to conduct attacks on Iran. Selling pressure was broad-based across sectors, with banking shares dropping 4.3%, insurance stocks falling 3.6%, and utilities declining 4.4%. The Stoxx Aerospace and Defense index, which includes some of Europe's largest defense contractors, also slipped nearly 2.6%, reversing gains in the previous session.
Travel and leisure stocks slid 2% as widespread airspace closures across the Middle East led airlines to cancel numerous flights, adding to investor concerns about the conflict's economic impact. The markets extended their decline as the confrontation between the US, Israel, and Iran spread across the broader Gulf region, deepening a risk-off sentiment among investors. Safe-haven demand lifted gold prices, while US and Asian equities moved lower.
Oil prices climbed for a second consecutive session amid concerns that escalating hostilities could damage key energy infrastructure and increase fuel costs, heightening inflationary pressures worldwide. Iran's Islamic Revolutionary Guard Corps (IRGC) announced on Monday that the Strait of Hormuz has been closed to transit and warned that vessels attempting to cross would be attacked.
The EU called for all parties to de-escalate, urging maximum restraint and the protection of civilian lives. In economic data, annual inflation in the eurozone edged up to 1.9% in February, compared with 1.7% in January. The euro/dollar parity was at 1.1591, down 0.85% as of 1740GMT.