By Joe Stonor


U.S. futures and European equities extended losses in late morning European trading after President Trump said he thinks the U.S.-Iran ceasefire is over, prompting market fears of escalation in the Middle East.

A jump in oil prices dampened already weak sentiment across equity markets. Nasdaq futures were down 1.4% following Trump's comments, after trading flat earlier in the European morning. Futures for the S&P 500 and the Dow Jones Industrial Average were down 1.3% and 1%, respectively.

European stocks extended earlier losses following Trump's comments, with banks and energy-intensive stocks bearing the brunt. A basket of European banking stocks fell 3%, while an aerospace and defense gauge also lost 3%. The Europe-wide Stoxx 600 was last down 1.8% at a one-week low.

"I think it's over. I don't want to deal with them anymore," Trump said at a North Atlantic Treaty Organization summit in Ankara, Turkey. The president stopped short of calling off the peace process altogether, however, adding that he will let U.S. negotiators "keep talking if they want."

Oil jumped immediately following the president's comments. Brent crude rose 6.5% to $78.97 a barrel and WTI futures jumped 6.5% to $75.03 a barrel. A break in the U.S.-Iran peace agreement would threaten shipping through the crucial Strait of Hormuz where about a fifth of the world's oil is transported.

Oil was already higher Wednesday after the U.S. struck a range of sites along Iran's coast in retaliation for Iranian attacks on commercial ships in the Strait.

Higher oil prices weighed especially heavily on European stocks, with the continent more vulnerable to an energy price hike resulting from conflict in the Gulf.

Germany's industrial-heavy DAX dropped 2.3%, with defense giant Rheinmetall losing 3.3% while Deutsche Bank dropped 5.6%. France's CAC 40 fell 2.15% in Paris, while the FTSE 100 was 1.6% lower in London. Italy's FTSE MIB dropped 1.7%, while the Dutch AEX fell 0.65%.

Losses were particularly acute in Spain. The IBEX 35 slid 2.75% after Trump said he wants to cut off trade with Spain.

"We don't want to do any trade business with Spain anymore," Trump said in Ankara, Turkey. "I don't want anything to do with Spain. Cut off all trade with Spain, please."

Madrid-listed banks slid sharply, with Banco Santander and BBVA losing 4.9% and 3.5%, respectively. The consequences of Trump's comments are unclear, given Europe trades as a bloc through the European Union.

However, energy-related stocks rose further on the higher oil price. London's BP rose 3.2%, Spain's Repsol gained 3.8% and Norway's Equinor was up 4.1%. Stainless steel manufacturer Acerinox--which has significant operations in the U.S--fell 4.8%.

There were early signs that investors were turning to the U.S. dollar for safety, with the greenback climbing 0.1% against a basket of global currencies.


Write to Joe Stonor at josephmichael.stonor@wsj.com


(END) Dow Jones Newswires

07-08-26 0610ET