Asia and European stock markets have plunged after Iran threatened to attack ships in the region in response to ongoing air strikes against the country by the US and Israel.

The UK’s FTSE 100 slumped 2.7%, or 287 points, to 10,492 as defence and mining stocks joined travel companies and banks in sharp declines at the prospect of higher energy costs and inflation.

The EuroStoxx 50 index slid 3.5% with markets in France, Germany and Spain falling between 3% and 4.6% as the Strait of Hormuz – through which about a fifth of the world’s oil and gas passes – remained effectively closed to ships.

This followed further declines in Asia where Japan’s Nikkei 225 shed more of this year’s gains with a 3% fall.

The BBC reported Ebrahim Jabbari, an adviser to the commander-in-chief of Iran’s Islamic Revolutionary Guard Corp (IRGC) had told state TV that ships “should not come to this region. They will certainly face a serious response from us.”

BlackRock World Mining (BRWM) undid yesterday’s gains, retreating 7.8% to 961p.

JPMorgan Japanese (JFJ) traded 6.2% lower and high-flying Seraphim Space (SSIT) gave up 8% as investors took more profits as risk aversion set in.

The more defensive closed-end funds in the Flexible Investments sector were broadly steady, however. Ruffer (RICA) was 0.3% firmer at 308.3p while Global Opportunities Trust (GOT) added 0.8% to 351.8p. Capital Gearing Trust (CGT) eased 0.4% and Personal Assets (PNL) was 0.9% lower. RIT Capital Partners (RCP), which earlier reported a good set of annual results, was also 0.8% softer at £21.62.