The IBEX 35 opened Tuesday's session in the red, extending the punishment from the previous day and distancing itself from its historic highs, amid a climate of risk aversion driven by fears that the war in the Middle East could ultimately harm the global economy.

On Monday, the index fell by 2.6%, its sharpest drop since the initial salvo of tariffs imposed by the U.S. administration of Donald Trump.

International markets once again adopted a defensive tone on Tuesday, with a new wave of sell-offs in equities, while the dollar and other safe-haven assets gained ground as investors assessed the impact of attacks by the United States and Israel on Iran on energy prices and global growth.

Trump on Monday defended a broad and open-ended military campaign against Iran, arguing that it was progressing better than expected.

Meanwhile, an official from Iran's Revolutionary Guard stated on Monday that the Strait of Hormuz is closed to maritime traffic and that the country will fire upon any ship attempting to cross.

This front was compounded by fears of an inflationary spike due to rising fuel costs, with the consequent risk that major central banks might adopt a more restrictive stance in their monetary policies.

In Washington, Secretary of State Rubio said Monday that the United States will take steps to mitigate rising energy costs following the spike in oil prices triggered by the conflict with Iran.

The futures market points to an implied probability of 95.4% that the Federal Reserve will keep rates unchanged at the end of its next two-day meeting on March 18, according to CME Group's FedWatch. Additionally, the probability of a pause in June—which had previously been below 50%—rose on Monday and now stands slightly above 50%.

The conflict also brings the risk of stagflation back to the table—a dangerous combination of sluggish growth and rising prices.

Despite this, there are also voices in the market urging caution when quantifying the damage, suggesting that a relatively swift resolution could favor a rebound in stocks.

"The initial market reaction reinforces our impression that, despite the uncertainty, the impact will be limited and may moderate over the coming days," analysts at Bankinter said on their Telegram channel.

"Therefore, with a medium-term outlook, we maintain our view to keep a cool head and look for opportunities in the declines," they added.

At 0802 GMT on Tuesday, Spain's IBEX 35 benchmark stock index was down 299.10 points, or 1.67%, to 17,576.70 points, while the FTSE Eurofirst 300 index of major European stocks fell 1.14%.

Notably, Naturgy dropped 5.68% after it was revealed that BlackRock had sold its 11.4% stake in the Spanish energy company Naturgy on the market at a discount. 

Elsewhere in the banking sector, Santander lost 1.82%, BBVA fell 2.16%, Caixabank dropped 1.31%, Sabadell declined 0.80%, Bankinter was down 1.69%, and Unicaja Banco lost 1.46%.

Among the large non-financial stocks, Telefónica fell 0.86%, Inditex dropped 0.67%, Iberdrola lost 2.02%, Cellnex declined 1.30%, and oil company Repsol rose 1.60%.

(Reporting by Tomás Cobos; editing by Benjamín Mejías Valencia)