European shares flat ahead of economic data

The pan-European STOXX 600 closed unchanged at 654.21 points

European shares were flat on Monday as markets ‌looked ahead to a busy week of economic data that could offer new clues on the European Central Bank’s policy path and monitored Iran-U.S. developments.

Investors braced for details of potential U.S. sanctions on countries with trade ties to Iran, expected ​to be announced by the country’s treasury secretary. Separately, Pakistan is trying to bring Iran back to the negotiating table.

There are a lot ⁠of unknowns riding on this sanctions at the moment, said Chris Beauchamp, chief market analyst, IG ​Group.

If you have a situation where the U.S. action is taken as a threat to the Iranian economy ​and they respond in the only way they can and then take action in the Strait of Hormuz, it would be particularly bad for European markets, he said.

The pan-European STOXX 600 closed unchanged at 654.21 points.

The threat of sanctions follows fears of ​prolonged inflation that impacted markets last week as U.S. Treasury yields hit a multi-decade high ​amid persisting tensions in the Middle East that have kept oil prices higher.

Among sectors, energy-intensive travel and leisure stocks led ‌gains, adding 1.7% as Brent crude dropped 1.9%.

Media and personal and household goods shares advanced 1.4%.

The benchmark STOXX 600 has pulled back in recent weeks after reaching record highs earlier this month on an earnings-fuelled rally with inflation concerns taking centre stage.

Money markets are pricing in a more hawkish move ​from the European Central ​Bank, betting geopolitical tensions ⁠could keep price pressures higher and drive the deposit rate close to 3% by late 2027.

Investors are also awaiting a string of economic releases ​this week, including German and French GDP data, the German Ifo ​survey and Spanish ⁠inflation figures, that could test expectations for a more hawkish ECB amid renewed pressure from energy prices.