European stocks fell sharply as military strikes escalated in the Middle East and US President Donald Trump issued fresh threats ahead of his deadline for a nuclear deal with Iran. The Stoxx Europe 600 index dropped as investors reacted to heightened geopolitical uncertainty, with energy and defense sectors seeing the steepest declines. Market volatility increased as traders assessed the risk of further military escalation.

The selloff reflects growing anxiety about the potential collapse of negotiations between the US and Iran. Trump's deadline for a new agreement has created a narrow window for diplomacy, with markets bracing for possible military action if talks fail. The situation has also pushed oil prices higher, adding to inflationary pressures across Europe.

Investors are particularly concerned about the impact on global trade flows and energy supplies. European companies with exposure to Middle Eastern markets saw their shares underperform, while safe-haven assets like gold and government bonds attracted buying interest. The market reaction underscores how quickly geopolitical tensions can disrupt financial stability.