02.03.202616:54:37UTC+00Euopean Stocks Close Sharply Lower

European stocks closed sharply lower on Monday, pulling back from the record highs reached throughout the previous week after war erupted in the Middle East over the weekend. The Eurozone’s STOXX 50 dropped 2.5% to 5,987, while the pan-European STOXX 600 fell 1.5% to 624. The escalation followed a US strike that killed Iran’s Supreme Leader and several senior officials, prompting Iran to launch a series of attacks on Middle Eastern countries aligned with the US, including assaults on their energy infrastructure. European benchmark natural gas prices surged by as much as 50%, and oil prices also rallied, driving inflation expectations and European bond yields higher and weighing heavily on bank stocks. Santander, BBVA, and Intesa Sanpaolo each fell around 4%. Consumer discretionary shares and automakers also declined amid concerns over higher inflation and interest rates: Inditex, LVMH, and Hermès lost more than 4%, while BMW and Volkswagen slid 5%. By contrast, defense and aerospace companies, along with energy producers, advanced.