European shares slipped on Monday, as inflation worries lingered with no sign of a deal between the US and Iran to end their three-month-old war.

Global bond rout from last week deepened with inflation figures from the US, Germany, China and Japan spooking investors and weighing on the world’s stock markets.

Over the weekend, a drone strike caused a fire at a nuclear power plant in the UAE, Saudi Arabia reported intercepting three drones, and US President Donald Trump warned that Iran must act “fast”.

It cemented fears that the war is unlikely to end soon as the Strait of Hormuz, a conduit for 20 per cent of the world’s energy supply, remains shuttered. Oil prices rose on Monday.

The pan-European STOXX 600 was down 0.5 per cent at 604.09 points, as of 0822 GMT, after ending the previous week lower. Most regional bourses were also in the red with Spain’s IBEX 35 and France’s CAC 40 off 0.5 per cent and 0.9 per cent, respectively.

“Short term, we remain neutral on European equities. They are still at risk compared to the US due to earning strength and energy impact,” said Michele Morganti, equity strategist and head of insurance at Generali Investments.

“These two engines, Iran and AI CapEx, are pushing inflation up, and 10-year rates are skyrocketing. That’s representing another negative for risk.” German Central Bank head Joachim Nagel said that central bankers could do “a lot more” to help financial markets and give them a positive momentum ahead of a Group of Seven finance ministers and central bankers meeting in Paris on Monday.

Money markets currently expect more than two rate hikes from the European Central Bank by the end of the year, with the first one likely in June.

Travel shares dropped 1.6 per cent with airlines Ryanair , Lufthansa and Easyjet down between two per cent and 3.1 per cent. Ryanair warned that consumer anxiety amid the war was likely to wipe out any growth in the peak summer months.

Banks and industrials weighed on the broader index, off 0.8 per cent and 0.6 per cent, respectively.

Luxury shares were under pressure. LVMH , Dior and Gucci owner Kering lost about two per cent each. Among individual stocks, Publicis added 2.7 per cent after the advertising group agreed to acquire US data collaboration company LiveRamp for an all-cash deal of about US$2.2 billion.

The media index gained 0.8 per cent. Sonova rose 2.5 per cent after the world’s biggest hearing aid maker forecast higher sales and earnings for the 2026/27 financial year.