April 13 (Reuters) - European stock futures tumbled more than 1% on Monday as optimism for a swift resolution to the Middle East conflict evaporated following the breakdown nL6N40V09S of crucial U.S.-Iran negotiations.
Futures tracking the pan-European STOXX 600 index slid 1.3% by 0643 GMT, with contracts tracking Germany's DAX and France's CAC 40 index down 1.5% and 0.5%, respectively.
Investor anxiety intensified as the U.S. announced preparations to blockade the strategic Strait of Hormuz, threatening
to choke off Iranian oil exports after diplomatic efforts between Washington and Tehran failed to produce any breakthrough in ending the ongoing war.
The tensions sent oil prices surging past the $100-per-barrel mark, reigniting inflation concerns that had only recently begun to subside. [O/R]
The STOXX 600 gained 3% in the previous week after news of a U.S.-Iran ceasefire helped the European benchmark claw back some of the losses incurred since hostilities began on February 28.
Investors are now bracing for the European Central Bank tilting towards raising rates in a sharp reversal from pre-war bets on rate cuts or a prolonged pause.
Interest rate futures are currently pricing in nearly three interest rate hikes of 25 basis points each by the end of this year, according to LSEG-compiled data.
Among stocks, British drugmaker GSK will be in focus after early data showed nL6N40T0P9 experimental targeted cancer drug Mo-rez helped shrink tumors in patients with advanced, hard-to-treat cancers.
(Reporting by Ragini Mathur; Editing by Mrigank Dhaniwala)
