European markets close higher as Iran war intensifies and economic sentiment sours

European stocks closed higher on Monday despite investors grappling with a further escalation in the Iran war and fresh evidence of weaker economic sentiment.

The pan-European Stoxx 600 climbed 0.8% after paring earlier losses, with most sectors — excluding technology and travel — seeing gains.

The FTSE 100 finished the day with a gain of 1.6%, buoyed by miners and energy stocks, while Germany’s DAX advanced 0.85%.

European equities rose despite new data showing a deterioration in economic confidence in the wake of the the Iran conflict.

The European Commission said Monday that readings for its Economic Sentiment Indicator and Employment Expectations Indicator fell in March. Meanwhile, the DG ECFIN flash estimate for consumer confidence “plummeted” in both the EU and euro area.

In corporate news, Orsted shares bounced 7% as Bank of America raised its priced target for the stock. The embattled renewables firm had endured a rough year marked by President Donald Trump’s efforts to ban Orsted’s key offshore wind project in the U.S. BofA, which upgraded Orsted to “buy” from “neutral”, said the risk-reward balance facing the stock has turned “firmly” positive.

European bourses bucked the negative lead set by their Asia-Pacific counterparts overnight, as traders digest the latest war developments over the weekend.

U.S. President Donald Trump told the Financial Times on Sunday that said he could “take the oil in Iran” and seize Iran’s export hub of Kharg Island. Meanwhile, Yemen’s Houthi movement said Saturday it had fired missiles at Israel, marking its first direct involvement in the U.S.- and Israeli-led war against Iran.

In a post on X, Houthi spokesperson Yahya Saree said the group launched a barrage of ballistic missiles at what it described as sensitive Israeli military sites, in support of Iran and allied Hezbollah forces in Lebanon.

The strike signals a further escalation in a conflict that began with U.S. and Israeli airstrikes on Iranian targets on Feb. 28. Oil prices were higher in early Asia trading hours. West Texas Intermediate crude futures were up 2.58% at $102.19 per barrel.

G7 finance ministers, energy ministers and central bank governors are set to hold an emergency meeting on Monday. The meeting, set to be held virtually, marks the fourth time since the start of the war in Iran that the G7 has convened at a ministerial level.