European Stocks Tumble as Trump Sets Hormuz Deadline

LONDON — European stocks followed Asian markets sharply lower at the start of the new trading week, as further escalation in the Iran war drags on global market sentiment.

The pan-European Stoxx 600 was 1.9% lower shortly after 9:00 a.m. in London (4:30 a.m. E.T.), with all major bourses and sectors firmly in negative territory.

Basic resources and industrial stocks were among the hardest hit, sliding 3.1% and 2.6%, respectively, as investors continued to flee gold and other precious metals. Spot gold was down 5.2% on Monday morning at $4254.22, with gold futures 7.4% lower, at $4234. 

Europe's slide, which followed a sell-off in Asian markets on Monday, came as concerns deepen over the Iran war and the blockage of vital maritime passage, the Strait of Hormuz.

U.S. President Donald Trump said Saturday that he would "obliterate" Iran's power plants if Tehran failed to fully reopen the Strait within 48 hours.

Iran responded by escalating threats to target energy infrastructure and desalination facilities in the Gulf. Iranian Parliament speaker Mohammad Bagher Ghalibaf also said Saturday that entities that purchase American government bonds and "finance the U.S. military budget" would be considered legitimate targets, alongside military bases.

In corporate news, Poste Italiane tumbled 7.3% in early dealmaking after Italy's majority state-owned postal service unveiled plans to buy Telecom Italia in a cash-and-share deal worth 10.8 billion euros ($12.5 billion). Poste Italiane is Telecom Italia's largest shareholder. Telecom Italia's shares rose 3.9%.

Delivery Hero advanced 2.4% in early dealmaking after it said it had agreed to sell its delivery platform in Taiwan to Grab Holdings for $600 million.

Crude prices whipsawed in volatile trading earlier Monday, with global benchmark Brent rising 1.3% to $113.70, while Asia-Pacific markets traded lower. U.S. stock futures edged lower on Monday with sentiment knocked after the major U.S. benchmarks posted their fourth-straight weekly loss.

Earnings reports in Europe come from Kongsberg Gruppen, Exor and Galp Energia. Spain trade balance data will also be released.

— CNBC's Anniek Bao contributed to this market report.