March 23 (Reuters) – European shares fell to a four-month low on Monday, led by the defense sector, as a spike in crude prices prompted investors to factor in potential inflation pressures with the Middle East conflict intensifying.
The pan-European STOXX 600 was down 1.6% at 564.13 points, as of 0808 GMT, having logged its third consecutive weekly loss on Friday.
All sectors were in the red, with industrials being the biggest drag in the benchmark index, as markets took a hit after Iran threatened to attack Israeli power plants and facilities supplying U.S. bases in the Gulf if U.S. President Donald Trump carries out his threat to “obliterate” Iran’s power network.
Europe’s benchmark STOXX now lags the U.S. benchmark S&P 500 as the region is highly dependent on oil imports via the Strait of Hormuz. The index has dropped roughly 11% so far this month.
The waterway’s closure has reignited inflation concerns, leading investors to now price in at least two 25-basis-point rate hikes by the European Central Bank this year, according to data compiled by LSEG, up from zero earlier in the year.
Shares of Delivery Hero advanced 2.8% after the German company sold its food delivery business in Taiwan to Grab Holdings for $600 million.
(Reporting by Avinash P in Bengaluru; Editing by Sherry Jacob-Phillips)
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