European equity markets showed little net movement on Monday as investors absorbed developments in U.S.-Iran diplomacy and prepared for a week dense with central bank meetings. A renewed stall in talks between Washington and Tehran contributed to firmer oil prices, reinforcing concerns that inflationary pressures could rise.
U.S. President Donald Trump cancelled a planned trip by envoys to Pakistan, a mediator in the Iran situation, over the weekend. Market sentiment was partly bolstered by an Axios report that Iran proposed reopening the Strait of Hormuz and suggested postponing nuclear negotiations to a later date.
Mr. Trump has said Iran could place a telephone call if it wished to negotiate an end to what he described as their two-month war, while reiterating that Tehran cannot possess a nuclear weapon. Those comments, and the diplomatic ebbs and flows, helped push oil prices higher and added to investor uncertainty about near-term inflation dynamics.
With elevated oil prices contributing to expectations that inflation may pick up, traders and portfolio managers are closely monitoring upcoming policy decisions at the European Central Bank and the Bank of England for any indications that either central bank might move to increase interest rates.
At 0703 GMT the pan-European STOXX 600 index was flat at 610.86 points.
Notable movers
- Nordex shares rose 8.3% after the German onshore wind turbine maker reported core earnings and sales that beat expectations.
- Forvia advanced 3.5% following the announcement that the French auto parts supplier will sell its car interiors business to Apollo Funds for 1.82 billion euros ($2.13 billion).
Market participants are also parsing geopolitical signals and central bank commentary for clues on the path of rates and inflation, given how energy costs and diplomatic developments can feed into price and policy expectations.