European stocks slide as Gulf tanker attacks threaten fragile ceasefire

European stocks fell on Monday, amid fears that a re-escalation of U.S.-Iran tensions over the weekend could derail the fragile ceasefire between the two countries.

The pan-European Stoxx 600 closed 0.9% lower, with all major bourses and regional sectors besides oil and gas finishing in negative territory.

President Donald Trump said Sunday that a U.S Navy guided missile destroyer had fired on and disabled an Iranian-flagged cargo ship in the Gulf of Oman before Marines boarded and seized the vessel.

The seizure is an escalation of the U.S. blockade of the strait and comes after Iran fired upon commercial vessels attempting to transit the maritime passage earlier Sunday.

Since last week, the U.S. has been operating a naval blockade of ships entering and exiting Iranian ports. Iran views the ongoing blockade as a breach of the ongoing ceasefire, which it cites this as one of its reasons for calling off the expected negotiations on Monday in Islamabad.

Trump warned on Sunday he would "knock out every single Power Plant, and every single Bridge, in Iran" if Tehran did not agree to Washington's terms to end the conflict. The fragile ceasefire between the two countries will expire this week.

Having declared on Friday that the Strait of Hormuz was reopened for shipping, Iran reversed that move Saturday, restricting vessel traffic through that key shipping lane, with state media saying the U.S. "did not fulfill their obligations."

The renewed tensions sent several European sectors into reverse on Monday, notably travel and leisure names, which had spiked during Friday's session after Iran had declared the Strait of Hormuz had been reopened. European travel and leisure stocks closed Monday 2.5% lower.