European stocks fall sharply as conflict grips the Middle East; oil prices jump

LONDON — European stocks were firmly in negative territory as global markets dropped after the U.S. and Israel launched widespread attacks on Iran at the weekend.

The pan-European Stoxx 600 was down 1.9% at 2:30 p.m. in London (9:30 a.m. ET), with major bourses and almost all sectors in negative territory.

Norwegian oil and gas exporters Vår Energi and Equinor were up 7% and 11% respectively, as concerns over global energy supplies grew.

European defense stocks were also higher. Italian aerospace staple Avio rose nearly 1%, Britain's BAE Systems advanced roughly 5% and Swedish fighter jet maker Saab gained almost 4%. Italy's Leonardo was up 3.4% and Germany's Renk rose 2.5%.

Companies linked to the travel and tourism sector slumped as global disruption continued Monday. Carnival PLC, the Anglo-American cruise line operator, was down nearly 9%, and International Consolidated Airlines was nearly 6% lower. TUI AG dropped 9.7%, and Lufthansa lost 2.3%.

The strikes on Iran killed the country's Supreme Leader Ayatollah Ali Khamenei, with the U.S. and Israel urging Iranian citizens to seize the opportunity to overthrow the regime.

Iran has launched retaliatory strikes against U.S. bases in the Middle East region, and three U.S. service members have been killed in the operation.

U.S. Defense Secretary Pete Hegseth said on Monday that more American casualties should be expected. "War is hell," Hegseth said. Air Force Gen. Dan Caine, chairman of the Joint Chiefs of Staff, reiterated at a briefing that it won't be a "single overnight operation" and there will be "additional losses."

Oil prices continued to surge on Monday as traders feared a major supply disruption through the Strait of Hormuz. International benchmark Brent crude prices hit a new 52-week high and were last up 8.6% to reach $79.15.

U.S. stocks tumbled on Monday and Asia-Pacific markets also slumped, with airline stocks seeing sharp losses amid Middle East airspace disruptions and airport closures.

The large-scale U.S. and Israeli assault was launched on Saturday after Iran refused U.S. demands to curb its nuclear program, and another round of talks, held last Thursday, ended without a deal.