European shares subdued as surging crude sharpens focus on ECB rate path

FRANKFURT: European shares closed flat on Monday as rising oil prices following renewed US-Iran tensions fuelled inflation worries, offsetting stronger-than-expected euro zone economic data.

The pan-European STOXX 600 ended at 649.9 points.

The Swiss main index dropped 0.8 percent. Heavyweight Novartis fell 3.2 percent after its cholesterol drug failed in a closely watched study.

Germany’s DAX fell 0.2 percent. Over the weekend, the country’s far-right AfD topped a state election in Saxony-Anhalt with 44 percent of the vote, dealing a major blow to Chancellor Friedrich Merz.

It remains unclear whether the AfD can form a government for the state as it fell short of an absolute majority. The party advocates tougher immigration curbs, closer ties with Russia, reduced support for Ukraine and a withdrawal from the euro.

“The AfD’s historic Saxony-Anhalt victory has nudged the DAX lower, but the muted reaction suggests investors see the result as a political warning rather than an immediate economic threat,” Axel Rudolph, chief technical analyst at IG, said.

Fiscal concerns ahead of next year’s election sent French stocks to two-month lows last week. The stock index was up 0.3 percent on Monday.

Energy shares gained 1.2 percent, tracking higher oil prices. Brent crude futures hovered near six-week highs and moved closer to USD100 a barrel as strikes on vessels in the Strait of Hormuz and elsewhere heightened fears of prolonged supply disruptions.