European stocks hit two-week low

The pan-European STOXX 600 dropped 1.5% to 623.98 points, its lowest since mid-February, putting the index on track for its worst day in more than seven months

European stocks hit a two-week low on Monday as the Middle East conflict showed no signs of cooling, triggering a broad-based selloff that left most of the sectors in the red.

The pan-European STOXX 600 dropped 1.5% to 623.98 points by 0451 GMT, its lowest since mid-February, putting the index on track for its worst day in more than seven months and dragging it away from the record high hit on Friday.

Germany’s stocks slipped to an over three-week low, France fell to a near two-week low and Spain declined to its weakest level in more than two weeks.

Bank shares took some of the heaviest punches. UK lenders were among the hardest hit, given their exposure to the Middle East, with HSBC, Barclays and Standard Chartered down 4% to 5%. The broader banking index declined 3.6%, while insurers slipped 2%.

Airlines and travel stocks were hit as well, hit by airspace closures and suspended routes to the Middle East, a key global aviation corridor. The sector declined to its lowest since mid-November and was on course for its biggest daily loss since April.

Lufthansa dropped 11%, while British Airways owner ICAG and Air France KLM shed 5% and 7%, respectively.

Consumer-facing names also slipped. Luxury groups such as LVMH and Kering slid 4%, while the broader retail sector dropped 3.6%.

Export-heavy European companies were swept up in the downdraft as investors priced in renewed supply-chain headaches. With maritime routes under pressure, shippers face higher freight costs, longer detours and knock-on delivery delays.

The geopolitical jolt hit as markets were recovering from a choppy February, due to uncertainty around AI-related spending and disruption, revived tariff worries and persistent geopolitical tension, keeping risk appetite on a short leash.

With U.S.’ Trump signalling the war could drag on, Europe’s volatility gauge, the STOXX volatility index, rose to its highest level since mid-November.