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(Sharecast News) - European shares opened lower and oil went beyond $100 a barrel on Monday after US President Donald Trump said he would start a blockade of Iranian oil in the Strait of Hormuz in response to the failure of peace talks with Tehran over the weekend.
The pan-regional Stoxx 600 index was down 0.79% to 610 at 0803 BST. Germany's DAX fell 1.23% and France's CAC 40 1%.
Hungary's BUX index was up almost 2% after the hard-right autocratic prime minister and close Trump and Russia ally Viktor Orban was kicked out of office after 16 years by Peter Magyar's Tisza party, in a result seen to be positive for relations with the EU.
With 98.74% of the vote counted Tisza was projected to have won 138 of the 199 seats in the country's parliament, giving it a super-majority capable of amending the constitution and key laws, indicating it could overturn changes made by Orban and his Fidesz party.
On oil markets brent crude was up 6.6% to $101.5 a barrel, while US benchmark West Texas Intermediate rose 7% to $103.
After talks between US and Iranian officials in Pakistan ended without agreement, Trump said via social media: "The United States Navy, the Finest in the World, will begin the process of BLOCKADING any and all Ships trying to enter, or leave, the Strait of Hormuz", adding that anyone attacking the US vessels would be "BLOWN TO HELL!"
However, military officials later said the blockade would be confined to vessels transiting through Iranian ports, with ships headed to ports belonging to the US's Gulf allies allowed safe passage. The blockade is due to come into effect at 1400 GMT.
"Even though President Trump is planning to blockade the Strait of Hormuz, the president is notorious for changing his mind and switching positions, so his threats are losing market impact. At the start of this week, traders are partly reversing last week's moves, but they are not back to panic levels, and some may argue that the sell-off could have been worse," said XTB research director Kathleen Brooks.
On the equities front, travel and leisure stocks predictably took the brunt of the impact from the collapse of peace talks with airlines Wizz, Lufthansa and easyJet, Ryanair, TUI and Carnival all lower.
Oil stocks gained in line with the jump in crude prices - BP, Equinor, VAR Energi, and Repsol were beneficiaries.
Reporting by Frank Prenesti for Sharecast.com