The IBEX 35 retreated on Monday, pulling back from its recent record as geopolitical risk surged following threats by Donald Trump to impose tariffs on several European countries if the US is not allowed to acquire Greenland, with markets awaiting a coordinated response from the EU.

EU leaders will debate a range of options on Thursday at an extraordinary summit in Brussels. Among them is a package of tariffs on €93 billion worth of US imports, which could be triggered automatically on February 6 after a six-month suspension.

The market reversal comes after ten sessions of sideways trading near record highs—on Friday, the Spanish benchmark hit a record 17,711 points—in a climate marked by geopolitical tensions and concerns over the independence of the US Federal Reserve amid pressure from Trump.

Meanwhile, uncertainty persists over stability in Iran, where the government has harshly repressed popular uprisings—though for now, the possibility of US intervention in the country appears to be receding—and over the future of Venezuela following the capture of its president, Nicolás Maduro, by the United States.

Trump pledged on Saturday to apply a growing set of tariffs from February 1 on Denmark, Sweden, France, Germany, the Netherlands, and Finland, as well as the United Kingdom and Norway, until the US is allowed to purchase Greenland—a move several major EU states have denounced as blackmail.

Analysts at Bankinter noted on their Telegram channel that "the geostrategic variable has become the main factor for the market. Especially knowing that unpredictability is part of Trump's strategy, whatever the issue."

"Greenland is a long-term issue, but in the short term it's heating up with the selective imposition of an additional 10% tariff on European states that sent troops to the island... which is also part of Trump's strategy to normalize living with uncertainty, so that the final outcome is not surprising, even if it is traumatic."

At 08:02 GMT on Monday, Spain's IBEX 35 benchmark index was down 187.20 points, or 1.06%, at 17,523.70 points, while the FTSE Eurofirst 300 index of major European stocks fell 1.06%.

In the banking sector, Santander lost 2.37%, BBVA fell 0.86%, Caixabank dropped 1.82%, Sabadell was down 1.79%, Bankinter declined 1.40%, and Unicaja Banco lost 1.98%.

Among major non-financial stocks, Telefónica slipped 0.30%, Inditex fell 1.29%, Iberdrola gained 0.30%, Cellnex rose 0.19%, and oil company Repsol lost 0.57%.

(Reporting by Tomás Cobos, editing by Jorge Ollero Castela)