European stocks slide as Gulf tanker attacks threaten fragile ceasefire

LONDON — European stocks fell on Monday, amid fears that a re-escalation of U.S.-Iran tensions over the weekend could derail the fragile ceasefire between the two countries.

The pan-European Stoxx 600 was more than 1.1% lower by 9:30 a.m. in London (4:30 a.m. E.T.), with all major bourses and regional sectors in negative territory.

President Donald Trump said Sunday that a U.S Navy guided missile destroyer had fired on and disabled an Iranian-flagged cargo ship in the Gulf of Oman before Marines boarded and seized the vessel.

The seizure is an escalation of the U.S.' blockade of the strait and comes after Iran fired upon commercial vessels attempting to transit the maritime passage earlier Sunday.

Since last week, the U.S. has been operating a naval blockade of ships entering and exiting Iranian ports. Iran views the ongoing blockade as a breach of the ongoing ceasefire, which it cites this as one of its reasons for calling off the expected negotiations on Monday in Islamabad.

Trump warned on Sunday he would "knock out every single Power Plant, and every single Bridge, in Iran" if Tehran did not agree to Washington's terms to end the conflict. The fragile ceasefire between the two countries will expire this week.

Having declared on Friday that the Strait of Hormuz was reopened for shipping, Iran reversed that move Saturday, restricting vessel traffic through that key shipping lane, with state media saying the U.S. "did not fulfill their obligations."

The renewed tensions sent several European sectors into reverse on Monday, notably travel and leisure names, which had spiked during Friday's session after Iran had declared the Strait of Hormuz had been reopened. European travel and leisure stocks were last seen 2.6% lower.

German airline Lufthansa was more than 4.2% down, while London-listed EasyJet had fallen 3.4%. TUI, the travel and tourism mainstay, shed almost 3.5%.

In contrast, the region's oil and gas stocks advanced, rising almost 1.8%. Norwegian oil and gas multinationals led the way, with Equinor and Vår Energi surged 4.5% and 4.3%, respectively. Elsewhere, BP rose 3.3%, Totalenergies added 2.5% and Shell's shares increased 2.5%.

Brent crude, the international oil benchmark, hit $95.86 a barrel on Monday, a 6.1% rise, while U.S. West Texas Intermediate futures for May delivery climbed 7.1% to reach $89.83, as oil prices rebounded following Friday's retreat.

Asia-Pacific markets were trading mostly higher overnight, but U.S. futures fell early Monday. The declines come after a winning week for Wall Street, with the S&P 500 and Nasdaq Composite climbing to all-time highs last week following a ceasefire between Iran and Lebanon.

There are no major earnings or data releases in Europe on Monday.

— CNBC's Justina Lee and Fred Imbert contributed to this market report.