European stock markets closed lower as U.S. President Donald Trump stated that extending the ceasefire was "highly unlikely," dampening hopes for an end to the conflict with Iran.
The STOXX Europe 600 index fell by 0.8% at the close. A basket of airline stocks dropped by 2.9%, while Brent crude oil traded around $96 per barrel. Cyclical sectors such as automobiles, banking, and industrials also underperformed. The energy sector, however, showed superior performance.
Investor optimism wavered on Monday after Trump indicated he would not extend the two-week ceasefire unless an agreement is reached. Over the weekend, the U.S. seized an Iranian vessel in the Gulf of Oman, and Iran fired upon multiple ships after re-establishing a blockade of the Strait of Hormuz.
European equities have yet to fully recover the losses incurred since the outbreak of conflict in the Middle East. Traders are closely monitoring a series of corporate earnings reports to assess the impact of rising energy costs on businesses in the region.
In individual stock movements, Loomis AB declined by 5% after Goldman Sachs analysts downgraded the company to neutral, suggesting that the market has largely priced in its strong growth and profit prospects.
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