European Stocks Flat as Iran-US Talks Stall

European equities ended Monday virtually unchanged, as a sharp drop in luxury goods shares offset gains elsewhere and uncertainty over stalled US-Iran talks pushed oil prices higher, keeping investors cautious. The pan-European STOXX 600 index closed flat at 612.79 points.

Regional benchmarks showed a mixed picture. Italy's index rose 0.8 percent, while France's CAC 40 fell 0.7 percent.

Luxury Goods Lead Declines

The luxury goods sector suffered the heaviest losses, tumbling 3.4 percent and recording the worst performance on the STOXX 600 so far this year. Shares of LVMH dropped more than 4.4 percent, while Hermès and Burberry each fell by over 3.3 percent.

Analysts at Berenberg said the conflict in the Middle East has obscured the reality that underlying global consumer demand remains weak, leaving the sector's outlook fragile.

Oil Prices Rise on Geopolitical Uncertainty

Uncertainty deepened after US President Donald Trump swiftly rejected Iran's response to Washington's peace proposal. This fueled fears that the 10-week-old conflict will drag on, continuing to paralyze shipping through the Strait of Hormuz and keeping oil prices elevated.

"Energy prices will remain high for a while, and it seems to me that markets are taking that somewhat for granted," said Jeremy Batstone-Carr, European strategist at Raymond James. "The reality isn't really in the price of crude oil, but in the price of diesel and jet fuel."

The war has effectively shut the Strait of Hormuz, a vital waterway for one-fifth of global energy flows, driving up oil prices and raising concerns about the conflict's impact on inflation and economic growth.

Travel Stocks Hit, Miners Gain

Travel and leisure companies are among the worst-performing stocks this year, having fallen more than seven percent.

Offsetting some of the broader losses, mining stocks rose 2.6 percent, tracking higher prices for precious metals.

Individual Stock Movers

In other notable moves, Delivery Hero shares surged more than 18 percent. The jump came after Dutch technology investment firm Prosos sold a five percent stake in the German food-delivery group to activist investor Aspex Management for approximately 335 million euros ($393 million).

Airtel Africa also jumped 14.5 percent after its parent company, Bharti Airtel, announced plans to review the shareholding structure of its subsidiary.