European stocks decline under pressure from the consequences of the conflict in the Middle East

Most European stock markets opened lower on Monday as the ongoing clashes in the Middle East led to a rush towards safe haven assets such as bonds and gold, and oil prices rose by more than three percent.

The European STOXX 600 index fell 0.2 percent by 0710 GMT, with shares in the chemicals, travel and entertainment sectors recording the largest losses.

Investors around the world refrained from taking risks amid the military clashes between Israel and the Palestinian Islamic Resistance Movement (Hamas), which exacerbated the political uncertainty in the Middle East and raised concerns about oil supplies.

The energy sector index jumped 2.2 percent as oil prices rose three percent to record more than $85 a barrel, which kept the broader market under pressure due to fears of high inflation.

Gains in shares of European defense industries companies, such as Sweden’s Saab, Italy’s Leonardo, and Germany’s Rheinmetall, ranged between 4.7 and 7.2 percent against the backdrop of the possibility of the military conflict continuing for a long period.

Airlines shares, including IAG, owner of British Airways, Air France KLM and Lufthansa, fell between 2.7 and 4.8 percent due to concerns about rising fuel costs.