European shares edge lower ahead of ECB meeting

In London, the blue-chip FTSE 100 mirrored the broader continent, sliding 0.4%, Germany’s DAX was down 0.2%, while Spain’s IBEX was down 0.4%

European shares edged lower on Monday, after a sharp worldwide technology sell-off late last week as investors braced for a highly anticipated European Central Bank meeting and political leadership changes in the UK.

The pan-European STOXX 600 index slid 0.2% in early trade, tracking quiet early trading following a volatile period where valuations in the artificial intelligence sector came under intense international scrutiny.

In London, the blue-chip FTSE 100 mirrored the broader continent, sliding 0.4%. Germany’s DAX was down 0.2%, while Spain’s IBEX was down 0.4%.

Geopolitical anxieties hung over the market, with the war involving Iran and U.S. stretching into its ninth consecutive day.

The persistent hostilities pushed Brent crude prices up 2.2% to trade higher on Monday, reviving concerns that a prolonged energy spike could trigger secondary inflationary pressures across the Eurozone.

The energy flare-up complicates the backdrop for the European Central Bank, which meets this Thursday. Policymakers are widely expected to hold the key interest rate steady at 2.25%, following a hike in June.

However, analysts note that the renewed surge in oil and gas prices will likely force ECB President Christine Lagarde to strike a hawkish tone, keeping a September rate hike firmly on the table.

While European indices lack the heavy tech concentration that dominates major Asian markets and U.S. stock market, the continent’s industrial and semiconductor players remain deeply tethered to U.S. tech spending.

In corporate news, European energy majors such as Shell, BP and TotalEnergies outpaced the broader market, rising over 1% each, on the 2.2% gain in crude prices.

Conversely, airline stocks dropped across the board, with Ryanair and Lufthansa down over 2% each.

Among corporate updates, Segro declined 1.5% after rejecting a revised offer from Prologis.