BRUSSELS, March 3 — Most European markets closed sharply lower on Monday as stocks tumbled amid escalating tensions in the Middle East, following coordinated US and Israeli strikes on Iran and Tehran’s retaliatory attacks on US bases across the region, reported dpa-AFX.
Inflation concerns have also resurfaced after Brent crude prices surged more than 10 per cent to their highest level since January 2025, driven by fears of supply disruptions in the Middle East.
On Monday, Israel launched airstrikes on Hezbollah targets in Beirut and other parts of Lebanon following projectile fire from Lebanese territory into northern Israel.
US President Donald Trump suggested the conflict with Iran could go on for the next four weeks, raising concerns about a significant widening of hostilities in the region that could severely disrupt the global supply of crude oil and send prices soaring to levels not seen in years.
Shares from banking, luxury, leisure, and automotive sectors were among the major losers, while defence stocks found support. Energy stocks gained as oil prices jumped.
The pan-European Stoxx 600 fell 1.61 per cent. The United Kingdom (UK)’s FTSE 100 ended down by 1.2 per cent, Germany’s DAX lost 2.56 per cent, and France’s CAC 40 slid 2.17 per cent, while Switzerland’s SMI closed down by 1.29 per cent.
Among other markets in Europe, Austria, Belgium, Greece, Iceland, Ireland, the Netherlands, Poland, Spain, Sweden and Turkey ended with sharp to moderate losses. Finland settled modestly lower, while the Czech Republic, Denmark and Portugal edged down marginally. Norway and Russia moved higher.
Data from S&P Global showed the S&P Global UK Manufacturing PMI was revised slightly lower to 51.7 in February 2026 from a preliminary of 52, and compared to a 17-month high of 51.8 in January.
The reading continued to point to expansion in the manufacturing sector, with output growth reaching the highest in 17 months.
UK mortgage approvals declined to a two-year low in January, while consumer credit logged a faster increase, data from the Bank of England showed Monday.
Net mortgage approvals for house purchases decreased unexpectedly to 59,999 in January from 61,007 in December. The number was forecast to rise to 62,000.
Data from mortgage lender Nationwide Building Society said UK house prices grew at a steady pace in February, reflecting a moderate recovery from a fall at the end of last year.
House prices posted an annual increase of one per cent in February, the same rate of growth as seen in January, the data showed. The rate was faster than the expected growth of 0.7 per cent.
Monthly, house prices logged a steady growth of 0.3 per cent in February.
The eurozone’s manufacturing activity registered its strongest growth in almost four years in February, underpinned by a renewed increase in new orders and production, final data from S&P Global showed.
The HCOB final manufacturing purchasing managers’ index (PMI) rose to 50.8 in February from 49.5 in the previous month. The reading matched the flash estimate.
Among the big four economies, Germany returned to growth for the first time in over three-and-a-half years.
The headline HCOB factory PMI advanced to 50.9 from 49.1 in the prior month. The flash score was 50.7. Growth in the French manufacturing sector moderated from January’s 43-month high.
The final factory PMI dropped to 50.1 in February from 51.2 in the previous month. The reading was slightly above the initial estimate of 49.9.
Germany’s retail sales declined unexpectedly in January, data from Destatis showed.
Retail sales decreased 0.9 per cent month-on-month in January, in contrast to the revised 1.2 per cent increase in December.
Sales were expected to remain flat. On a yearly basis, growth in retail sales eased to 1.2 per cent from 2.5 per cent in December.
In nominal terms, retail sales remained flat every month and increased 2.5 per cent from the previous year.
