European shares dip as rise in oil prices weighs; Novartis slips

European shares were subdued on Monday as rising oil prices following fresh US-Iran attacks stoked inflation concerns and reinforced expectations that the European Central Bank could raise interest rates later this week.

The pan-European STOXX 600 fell 0.1% to 649.17 points by 0711 GMT.

The Swiss main index dropped 1.2%. Heavyweight Novartis fell 3.3% after its experimental drug pelacarsen missed a key goal in a late-stage trial.

Germany’s DAX was flat, largely in line with other regional bourses.

Over the weekend, the country’s far-right AfD topped state elections in Saxony-Anhalt with 44% of the vote, exit polls showed, dealing a major blow to Chancellor Friedrich Merz.

Energy stocks advanced 1.2%, tracking higher oil prices.

Brent crude futures rose more than $1 a barrel as tit-for-tat strikes between the US and Iran on vessels sailing in the Strait of Hormuz and other areas heightened concerns of a prolonged supply disruption.

Higher oil prices have fuelled inflation concerns, strengthening the case for further policy tightening.

The ECB is widely expected to raise rates by 25 basis points on Thursday, while US CPI data later this week comes into focus after a strong jobs report boosted expectations of a rate hike by the Federal Reserve this month.

Investors will also monitor second-quarter euro zone economic data due later in the day.

Trading volumes could be lighter than usual with US stock markets closed for a public holiday.