European stock markets opened with modest losses on Monday after fresh military actions involving the United States and Iran sent oil prices and government bond yields higher. Despite the early weakness, the pan-European STOXX 600 remained positioned to record a fifth consecutive monthly rise.
By 07:12 GMT the STOXX 600 was trading flat at about 655 points following an initially softer start. London markets were closed for a bank holiday, reducing trading activity in the region.
Energy names were among the better performers, up 0.6% as Brent crude jumped more than 2% and was trading around $90.70 a barrel. The move in crude followed reports that U.S. forces struck two missile launchers on Iran's Larak Island in the Strait of Hormuz on Sunday - the first known U.S. military action against Iran since late July - with Iranian media reporting that Tehran in turn attacked two U.S. air bases in Jordan.
Germany's DAX lost 0.5% on the session as investors awaited inflation data from Europe's largest economy, a release that could influence the European Central Bank's rate path. Market participants also have euro zone inflation figures and U.S. payrolls on their calendars later this week.
Among individual movers on the STOXX 600, Faroe Islands salmon producer Bakkafrost was a notable decliner, falling 7.1% after releasing its second-quarter results. The company was among the leading drops on the index during early trading.
Market context
- Macro and geopolitical headlines pushed energy and bond markets, creating cross-asset moves that weighed on European equity indices at the open.
- Key economic data due later in the week - euro zone inflation and U.S. payrolls - are likely to shape near-term market direction.
- Holiday closures, such as the London bank holiday, can mute liquidity and accentuate price swings in affected markets.
What to watch next
- Inflation figures from Germany and broader euro zone inflation data.
- U.S. payrolls data scheduled for later in the week.