European shares subdued as surging crude sharpens focus on ECB rate path (updated)

Novartis AG

07/09/2026 17:33

Novartis slips as its drug fails to cut heart attack, stroke risk
Energy stocks rise as crude prices hold near six-week highs 
Deutsche Bank now expects ECB to raise rates in December after September move
Euro zone investor morale hits highest reading in more than four years, survey shows
Updates with closing levels
By Medha Singh and Ragini Mathur
Sept 7 (Reuters) - European shares closed flat on Monday as rising oil prices following renewed U.S.-Iran tensions fuelled inflation worries, offsetting stronger-than-expected euro zone economic data. 
The pan-European STOXX 600 .STOXX ended at 649.9 points. 
The Swiss main index .SSMI dropped 0.8%. Heavyweight Novartis NOVN.S fell 3.2% after its cholesterol drug failed in a closely watched study.
Germany's DAX .GDAXI fell 0.2%. Over the weekend, the country's far-right AfD topped a state election in Saxony-Anhalt with 44% of the vote, dealing a major blow to Chancellor Friedrich Merz.
It remains unclear whether the AfD can form a government for the state as it fell short of an absolute majority. The party advocates tougher immigration curbs, closer ties with Russia, reduced support for Ukraine and a withdrawal from the euro.
"The AfD’s historic Saxony-Anhalt victory has nudged the DAX lower, but the muted reaction suggests investors see the result as a political warning rather than an immediate economic threat," Axel Rudolph, chief technical analyst at IG, said.

EURO ZONE DATA
Fiscal concerns ahead of next year's election sent French stocks .FCHI to two-month lows last week. The stock index was up 0.3% on Monday. 
Energy shares .SXEP gained 1.2%, tracking higher oil prices. Brent crude futures hovered near six-week highs and moved closer to $100 a barrel as strikes on vessels in the Strait of Hormuz and elsewhere heightened fears of prolonged supply disruptions. 
Data offered some support for the regional economy. Euro zone investor morale rose to its strongest reading in more than four years in September, while second-quarter GDP expanded 0.6% from the previous quarter and 1.2% year on year, both above expectations.
Trading volumes were thin, with U.S. markets closed for a public holiday.
     
RISING RATE BETS
The higher oil prices have fuelled inflation concerns, triggering a global bond selloff last week and strengthening the case for further policy tightening.
The European Central Bank is widely expected to raise rates by 25 basis points on Thursday, while U.S. CPI data this week comes into focus after a strong jobs report boosted expectations of a rate hike by the Federal Reserve this month.
Deutsche Bank now expects the ECB to follow a September move with an additional quarter-point increase in December.
While policymakers have signalled little appetite for further tightening, traders are still pricing in another increase by year-end and one more in 2027.
Among other stocks, Italy's Lottomatica LTMC.MI rose 7.7% after the betting company provided further details on how its proposed merger with Spain's Cirsa CIRSA.MC would boost its online business. Cirsa shares rose 6.1%.

 (Reporting by Medha Singh and Ragini Mathur in Bengaluru; Editing by Janane Venkatraman, Sonia Cheema and Alison Williams)
 ((medha.singh@thomsonreuters.com))