Source: Sharecast
The pan-regional Stoxx 600 index was down 0.91% to 620 at 0825 BST with all major bourses in the red.
US President Donald Trump on Sunday said an American destroyer had fired on and disabled the Iranian vessel which he claimed was trying to run the American blockade before it was boarded and seized by marines.
Meanwhile, Iran declared the key Hormuz strait closed again and fired on commercial vessels trying to transit. Tehran warned on Monday that it would retaliate for the seizure of the cargo ship and also said it would not participate in a second round of talks the US had hoped to begin before the ceasefire expires on Tuesday.
“The rhetoric has once again intensified as attention moves towards a second round of negotiations between Tehran and Washington in Pakistan, but it's not at all clear whether these discussions will take place,” said Derren Nathan, head of equity research at Hargreaves Lansdown.
“Whether this impasse proves to be merely a detour on the path to a resolution remains to be seen, but more volatility would seem the most likely outcome.”
Oil prices gained in line with fears of a resumption of hostilities. Brent crude was up 4.68% to $94.61, while US West Texas Intermediate gained 5.15% to $88.17 a barrel. Energy stocks Equinor, Aker BP, ENI, BP and Shell were higher as a result.
Airlines, sensitive to any move in oil prices, fell, with Ryanair, Lufthansa and easyJet down.
Loomis fell on a downgrade by Goldman Sachs to ‘neutral’ from ‘buy’.
Reporting by Frank Prenesti for Sharecast.com