European Shares Tick Lower As Investors Assess US-Iran Jitters; Tech Earnings Loom

European shares slipped on Monday as the deteriorating conflict in the Middle East stoked inflation fears ahead of a European Central Bank meeting this week.

The pan-European STOXX 600 index fell 0.30% to 639.6. Travel and leisure stocks were the biggest laggards, declining 0.95%. US strikes on Iran entered a ninth straight day on Monday and risks to shipping through the Strait of Hormuz mounted after reports of tankers being immobilised. Brent crude prices surpassed $90 a barrel for the first time in a month before trimming gains. Energy stocks rose 0.98%.

Ryanair led losses on the STOXX 600, down 4.55%, after the budget airline reported a 34% drop in first-quarter profit, hurt by higher fuel costs and lower fares.

Meanwhile, tech stocks were up 0.13% ahead of earnings from US Big Tech giants, which could provide fresh stimulus to the industry. Last week, stellar quarterly updates from ASML and TSMC failed to impress investors. Equities are at a delicate juncture.

A global pullback in tech stocks and renewed fighting in the Middle East have dampened sentiment, while markets are also awaiting the interest rate decision from the ECB later this week.

Investors expect the central bank to keep rates on hold, though they are pricing in at least one 25-basis-point hike by the end of the year, according to LSEG-compiled data.

"The main reason for the ECB to sit on its hands this week is that near-term inflation is now tracking well below the Bank's June baseline scenario despite the rebound in oil prices," Pantheon Macroeconomics' chief euro zone economist Claus Vistesen wrote. In the UK, Andy Burnham became the seventh prime minister in a decade. He pledged to set out new measures to help tackle the cost of living this week, before setting out a new 10-year plan for the country later this year.

"The big question is how his government will fund the changes, particularly amid a backdrop of geopolitical instability and high levels of national debt," AJ Bell's head of financial analysis, Danni Hewson, said.

Among individual stocks, Thule fell 3.61% after the sports and outdoor products maker reported second-quarter sales that slightly missed market expectations and warned of price hikes. Swiss field device maker Belimo fell 2.37% despite demand in the data center sector driving higher first-half revenue.

Computacenter advanced 5.55% to top the STOXX 600 after Berenberg upgraded the IT services provider. IP Group ended 0.16% higher after Railpen, its largest shareholder, announced a sweetened takeover proposal for the early-stage science investor.