March 2 - European share prices weakened across nearly all sectors on Monday as ongoing military activity in the Middle East showed no sign of abating, boosting energy and defence stocks even as broader markets fell.
By 0812 GMT the STOXX 600 had declined 1.8% to 622.35 points, its lowest reading since mid-February and a retreat from the record high reached on Friday. Most industry groups were deep in negative territory.
Major energy companies led gains within their sector. Shell, BP and TotalEnergies each rose more than 5%, tracking a sharp uptick in oil that surged as much as 13% after shipping through the strategic Strait of Hormuz was disrupted by retaliatory Iranian attacks. The broader energy index advanced about 3.5%.
Market participants reacted to fresh military strikes by the United States and Israel on Iran, which followed weekend attacks that killed Iran’s Supreme Leader Ayatollah Ali Khamenei, according to reports. Tehran responded with missile barrages across the region, amplifying concerns that the fighting could spread and draw in neighbouring countries.
Travel and leisure stocks suffered the steepest losses, dropping 4.4% overall. German carrier Lufthansa tumbled 11% after extending flight suspensions because of the Middle East situation. Banking shares dropped 3.6% and insurers fell about 2%.
By contrast, defence contractors posted notable gains. BAE Systems, Rheinmetall, Saab and Leonardo each rose between 5% and 8%, while the defence sector index increased 0.4%. Analysts and market participants pointed to the escalation in hostilities as pushing up expectations for higher U.S. defence spending.
The moves illustrate a market environment where geopolitical escalation is shifting investor preference toward energy producers and defence firms, while travel-related industries, financials and insurers face immediate downside pressure.
Note: This article preserves reported market levels, company moves and developments as stated in available reports without adding new data or commentary.