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

European shares experienced a subdued performance on Monday as rising oil prices sparked inflation concerns and increased the likelihood of a rate hike by the European Central Bank later in the week. The pan-European STOXX 600 index fell by 0.1% to 649.17 points by 0711 GMT. The Swiss main index also declined by 1.2%. Novartis, a major pharmaceutical company, saw its shares drop by 3.3% after its experimental drug pelacarsen failed to meet a critical target in a late-stage trial. Germany's DAX remained relatively stable, aligning with other regional bourses.

The weekend witnessed the far-right AfD party securing 44% of the votes in state elections in Saxony-Anhalt, a significant setback for Chancellor Friedrich Merz. This development occurred amid heightened tensions between the United States and Iran, with tit-for-tat strikes in the Strait of Hormuz and other regions raising concerns about potential supply disruptions and a sustained increase in oil prices. Brent crude futures surged by more than $1 a barrel due to these developments.

The rise in oil prices has fueled inflation concerns, bolstering the argument for further tightening monetary policy. The European Central Bank is widely anticipated to raise interest rates by 25 basis points on Thursday. Additionally, the release of U.S. CPI data later in the week, following a strong jobs report that has heightened expectations of a rate hike by the Federal Reserve this month, will be closely monitored by investors.

Economic data for the euro zone, due later in the day, will also be scrutinized. Trading volumes may be lighter than usual, as U.S. stock markets are closed for a public holiday.