European Stocks Plummet to Session Lows Amid Concerns Over Ongoing Closure of Strait of Hormuz

European Stocks Plummet Amid Iran Tensions and Banking Concerns

The Stoxx Europe 600 index experienced a significant decline, hitting a session low of 0.8% and settling at 0.6% lower by 2:06 p.m. in London. The downturn was driven by concerns over disruption to global oil supplies following Iranian Supreme Leader Mojtaba Khamenei's statement that the Strait of Hormuz should remain closed.

Brent crude oil prices traded near $100 a barrel, while major Gulf producers cut output in response to the ongoing tensions. This development has intensified volatility in European equity prices, with the region's main volatility index reaching its highest levels since the tariff turmoil of last April.

The Europe banking index sank as much as 3.4%, with Deutsche Bank AG leading the declines, losing 5.2% after the lender flagged a €26 billion exposure to private credit. This asset class is grappling with fund redemptions, adding to the negative sentiment.

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In contrast, Zalando SE jumped as much as 14% after reporting earnings and announcing a partnership with Levi Strauss & Co., while Abivax SA soared as much as 18% after granting AstraZeneca Plc exclusive access to confidential information.

Building material stocks declined due to the European Commission's consideration of relaxing carbon-permit supply rules and allowing more state aid as part of an emergency plan to cut spiking power prices. Holcim Ltd., Heidelberg Materials AG, and Buzzi SpA all experienced losses of 3.1%, 3.2%, and 2.5%, respectively.