Europe midday: Stocks plunge, oil surges as Trump declares Iran MoU 'over'

(Sharecast News) - European shares plunged and oil prices surged after US President Donald Trump declared the fragile truce with Iran "over" after both countries exchanged missile strikes.

The Stoxx 600 index was down 1.68% at 1133 BST with all benchmark indices in negative territory. Sentiment was also hit by further worries around valuation of artificial intelligence companies after another sell-off in Asia.

Germany's DAX led declines, down 2.21% at the open, while France's CAC 40 fell 2%, Italy's FTSE MIB 1.4%, while Spain's IBEX 35 dipped 2.55% with Trump also renewing his threat to cut off trade with Madrid in response to its refusal to allow American fighters to attack Iran from military bases on its soil.

Oil prices rocketed after Trump declared the 60-day memorandum of understanding with Tehran as "over". The US on Tuesday said it had launched "a series of powerful" strikes against Iran after three oil tankers were attacked in the Strait of Hormuz.

Speaking at the Nato summit in Turkey, Trump added: "I do not want to deal with them any more, they are scum. They are sick people, they are vicious, violent people."

"As far as I am concerned, it's just a waste of time dealing with them. They are liars. ... There is something wrong with them. They are cuckoo. As far as I am concerned, it is over," Trump said.

The Trump administration also said the US has revoked a waiver that allowed Iran to sell oil. The waiver was issued as part of the interim peace deal between the two.

In response, Brent crude surged 5% to $77 a barrel, while West Texas Intermediate was almost 5% higher at $73.88. Oil majors were an immediate beneficiary, with Aker BP, Equinor, Repsol, Var Energi, BP and Galp all higher.

Reporting by Frank Prenesti for Sharecast.com