European Markets Slide as Iran Closes Strait of Hormuz Amid Truce Collapse

European stock indices faced heavy selling pressure on Thursday, erasing gains from previous sessions as geopolitical instability returned to the forefront. The pan-European Stoxx 600 fell 0.7% to 609.46, while Germany's DAX led the decline with a 1.2% drop. France's CAC 40 shed 0.8% and the U.K.'s FTSE 100 declined 0.2%. The market volatility is primarily driven by the collapse of a fragile truce in the Middle East. Tensions spiked as Israel expanded its military operations in Lebanon, prompting Iran to close the Strait of Hormuz. Iranian state-affiliated media further escalated the situation by suggesting the Revolutionary Guard Navy had deployed sea mines within the strategic waterway. Iranian Foreign Minister Araghchi stated that the U.S. must decide between a ceasefire or continued war, placing the onus on Washington. In response, U.S. President Donald Trump affirmed that American military forces would remain deployed in and around Iran until Tehran adheres to a 'real agreement.' Adding to the bearish sentiment, Germany reported a surprise contraction in industrial production. Data from Destatis showed a 0.3% decline in February compared to January, missing analyst expectations of a 0.6% increase. In corporate developments, the London Stock Exchange Group rose approximately 1% following the announcement of a share buyback program of up to 900 million pounds. Conversely, pharmaceutical company Fagron fell 1.4% despite robust Q1 revenue, and British American Tobacco dropped 0.5% following the appointment of Dragos Constantinescu as CFO.