Iran may be threatening to close the Strait of Hormuz, but experts told CNBC that it's also the one with the most to lose.

In major move after U.S. struck Iranian nuclear sites, the country's parliament on Sunday reportedly approved the closure of the Strait of Hormuz, risking alienating its neighbors and trade partners.

Read more on the story here.

— Lim Hui Jie

Regional defense stocks were lower on Monday as investors assessed the fallout of the U.S. joining Israel's strikes on Iran.

The Stoxx Europe Aerospace and Defense index was last seen around 0.5% lower, starting the week on a negative note after gaining 1.1% over the course of last week.

German defense giant Rheinmetall was 1.7% lower during early trade, paring earlier losses, while Sweden's Saab shed 1.3% and France's Thales was down by around 0.8%.

Bucking the trend was Polish defense equipment manufacturer Lubawa, which jumped 3.5% during early trade.

— Chloe Taylor

As markets digest the U.S. strikes on Iran over the weekend, the dollar is on the rise, while other currencies typically seen as safe havens have lost momentum.

The U.S. dollar index — which measures the greenback against a basket of major rivals — was 0.3% higher by 8:25 a.m. in London. So far this year, the dollar index has shed around 8.8%.

Dollar index price.

The safe haven Swiss franc was flat against the dollar during early European trade, paring gains seen ahead of the regional open.

Meanwhile, the Japanese yen — also typically seen as a safe haven during times of geopolitical or macroeconomic uncertainty — lost ground. The Japanese currency shed 0.7% against the dollar on Monday morning, 0.5% against the euro and 0.7% against the British pound.

Japanese yen price.

Market watchers noted on Monday that the yen would come under pressure if the Strait of Hormuz, a waterway crucial to the transit of oil, is closed.

"Eyes are on how Iran would retaliate — a potential withdrawal from its cooperation with the International Atomic Energy Agency and abandon the Nuclear Nonproliferation Treaty," analysts at Maybank said in a Monday morning note. "Risk sensitive (AUD, NZD, CAD) and net oil importers (KRW, JPY, TWD, PHP, INR) could continue to remain under pressure."

"We think USD/JPY works as a hedge against an escalation in geopolitical tension in the Middle East with positive carry," analysts at Bank of America said in a Friday note.

"The US is largely energy-independent. Japan imports almost all of petroleum it needs and more than 90% of its petroleum imports come from the Middle East, the highest dependency among G10 economies. USD/JPY can reprice higher if the oil price remains elevated."

— Chloe Taylor

Milan-listed shares of Stellantis fell nearly 6% shortly after the opening bell, before swiftly paring some of its losses after a brief trading suspension. The stock was last seen trading down 2.1%.

That comes shortly after new CEO Antonio Filosa announced the firm's new management team on his first day in the job.

"It is my great privilege to take the lead of Stellantis, a global company with deep regional roots," Filosa said in a statement.

Alongside taking the reins, the company said, Filosa will retain his role as head of North America and American brands.

Stellantis chief financial officer Doug Ostermann will take on responsibility for mergers and acquisitions and joint ventures, while Jean-Philippe Imparato continues in his role as head of enlarged Europe and European brands, which will now also include the struggling luxury Maserati unit.

— Sam Meredith

We're 10 minutes into Monday's trading session, and European shares are trading lower as the Middle East conflict — and America's involvement in it — remains in focus.

The pan-European Stoxx 600 was last seen 0.4% lower, with every sector barring oil and gas in negative territory. All major bourses are in the red, with France's CAC 40, down 0.7%, leading losses.

— Chloe Taylor

The U.S. joining the war between Israel and Iran might seem like a geopolitical flashpoint that would send markets tumbling. Instead, investors are largely shrugging off the escalation, with many strategists believing the conflict to be contained — and even bullish for some risk assets.

Read more here.

— Lee Ying Shan

Good morning from London, and welcome to CNBC's live blog covering European financial markets and the latest regional and global business news, data and earnings.

Futures data from IG suggests a choppy start for European markets, with London's FTSE looking set to open 0.3% lower at 8,747, Germany's DAX down 0.4% 23,222, France's CAC 40 0.5% lower at 7,536 and Italy's FTSE MIB 0.6% lower.

Global market sentiment could plummet further this week after the United States entered Israel's war against Iran over the weekend, launching strikes against three nuclear sites in Fordo, Isfahan and Natanz. The move by U.S. President Donald Trump surprised investors because he had said last Friday that he would make a decision to attack Iran "within the next two weeks," according to the White House.

The latest attacks caused oil prices to rise further and have stoked fears of a wider conflict in the Middle East. Asia-Pacific markets declined overnight, while U.S. stock futures fell ahead of Monday's session.

— Holly Ellyatt

Global markets will be on edge, given the escalation in the Middle East over the weekend, as a further spike in oil prices could be on the cards.

In Europe, flash purchasing managers' index data, showing business activity in the services and manufacturing sectors, is due Monday morning.

There are no other major earnings or data releases.

— Holly Ellyatt