European stocks traded lower on Monday, as investors monitored rising tensions between the United States and Iran.
The pan-European Stoxx 600 slipped 1.2% by mid-morning, with autos, chemicals and bank stocks all falling by around 1.9% to lead losses, as all sectors except oil and gas traded in the red.
Market players are fleeing riskier assets like equities in favor of safer alternatives like gold and bonds after a U.S. airstrike last week killed Iran's top military commander, Qasem Soleimani, in Iraq. The attack has heightened already-volatile relations between Washington and Tehran.
Oil is also surging on the back of intensifying U.S.-Iran tensions, amid fears it could disrupt supply in the Middle East. Brent crude futures were up 1.72%, or $1.18, at $69.78 a barrel at 9:50 a.m. London time. U.S. West Texas Intermediate (WTI) crude futures climbed 1.44%, or $0.9, to $63.95.
Over the weekend, Iraq's parliament passed a resolution calling for the government to expel foreign troops from the country. President Donald Trump responded by threatening to impose sanctions on Iraq. Meanwhile, Iran has declared it will no longer adhere to uranium enrichment restrictions agreed under the 2015 nuclear deal.
In Asia, markets mostly fell with Japan leading the losses. The Nikkei 225 dived 1.9% while MSCI's broadest index of Asia-Pacific shares excluding Japan slipped 1%.
Back in Europe, Spanish Socialist leader Pedro Sanchez failed to secure parliament backing to form a government. He'll have another chance on Tuesday, when another vote will be held in which he only requires a simple majority.
On the data front, euro zone business activity hovered near stagnation in December, according to IHS Markit's final composite PMI (purchasing managers' index) figures published Monday.
The currency bloc's reading edged up to 50.9 in December from November's 50.6, slightly beating expectations but remaining just above the 50 mark, which separates growth from contraction.
France, Germany and Italy all saw service sector PMIs pick up in December to either match or beat forecasts, with improvements over the broad set of data pushing the euro higher.
Sterling climbed after Britain's service sector surged on the greater certainty resulting from the landslide Conservative election victory last month, despite a stagnant economy. December's composite PMI for the U.K. was revised up to 50.0 from an initial "flash" estimate of 49.0.
Stocks on the move
Britain's John Wood Group led the bounce for oil stocks on the back of escalations in the Middle East, climbing 5.3% to lead the Stoxx 600.
At the other end of the European benchmark, Covestro shares slumped 6.2% after Societe Generale and Mainfirst brokers warned of declining earnings in 2020, according to Reuters.
London-headquartered Hikma Pharmaceuticals slid 4.4% after J.P. Morgan downgraded the stock.
Air France KLM continued to slide a further 3.9% on the back of the spike in oil prices and calls for crew strikes from unions over a new pension system proposed by the French government.
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January 06, 2020 at 01:02PM
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European stocks decline as US-Iran tensions fuel safe haven buying - CNBC
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