European stocks closed sharply lower on Thursday, mirroring the retreat in North American markets and extending a spell of heightened volatility as the war in the Middle East further weighed on the European economic outlook. The Eurozone’s STOXX 50 fell 1.7% to 5,771, while the pan-European STOXX 600 declined 1.4% to 604.
Tensions between Iran and Israel showed no sign of easing, and Iran continued to target energy, transportation, and civilian infrastructure across GCC states, fueling another leg higher in energy prices. The spike in natural gas prices hit European benchmarks particularly hard, pushing bond yields higher and triggering a renewed sell-off in banking shares, with Santander, UniCredit, and Deutsche Bank each losing close to 3%.
Expectations of persistently higher power prices also pressured major industrial names, with Siemens and Safran dropping more than 3%. Logistics giant DHL slumped 4.6%, as bottlenecks for container ships in the Strait of Hormuz further clouded the outlook for global trade.
