(Sharecast News) - The rally in European shares sputtered to a halt on Monday after the Stoxx 600 hit a fresh intraday high, with equities closing mixed across the continent.
The pan-European Stoxx 600 fell 0.35% to 650.50.
Germany's DAX managed gains of 0.15% to 25,817.89, France's CAC 40 declined 0.33% to 8,479.87, and London's FTSE 100 lost 0.26% to 10,651.77.
In commodities, Brent crude futures were last down 0.46% on ICE at $71.79 per barrel, while the NYMEX quote for West Texas Intermediate was 0.57% lower at $68.30.
Patrick Munnelly, market strategy partner at TickMill, said London had started the week with an early push to a fresh four-month high, but that the move had failed to hold.
"The market tone was not outright bearish, but the early reversal mattered," he said.
"The benchmark's failure to sustain a breakout suggested investors remain reluctant to chase UK equities higher while domestic activity data continue to weaken, political uncertainty persists and the Bank of England remains in wait-and-see mode rather than moving toward rate cuts."
David Morrison, senior market analyst at Trade Nation, said European indices had made a mixed start to the week before picking up soon after the open, although upside momentum faded by mid-morning and the major benchmarks pulled back from earlier highs.
Euro area construction downturn deepens
On the economic front, the downturn in the eurozone construction sector deepened in June.
S&P Global's eurozone construction PMI total activity index fell to 42.8 from 43.7 in May, moving further below the 50 mark separating growth from contraction.
Construction activity contracted across the three largest eurozone economies, led by a sharper decline in France.
Germany was the only major economy where the pace of contraction eased, although activity still fell robustly.
Residential construction remained the weakest segment, followed by commercial activity, while civil engineering recorded the softest decline.
Usamah Bhatti, economist at S&P Global Market Intelligence, said the sector remained weak, with all three monitored segments recording accelerated declines.
He said weak demand had led firms to cut purchasing and employment, while confidence in the year-ahead outlook had deteriorated slightly from May.
However, he noted some tentative positives, including the softest fall in new orders for four months, shorter supply delays and easing input cost inflation.
Investor morale in the eurozone meanwhile improved more than expected in July.
The Sentix index rose to -3.1 from -13.4 in June, beating expectations for a reading of -10 and marking its third consecutive increase.
German factory orders rebounded more strongly than expected in May, rising 1.9% month-on-month after a revised 3.2% fall in April.
The increase exceeded forecasts for growth of around 1.2% and was driven mainly by an 85.0% surge in large transport equipment orders, including aircraft, ships, trains and military vehicles.
Excluding large orders, factory orders still rose 1.0%.
Demand for electrical equipment increased 5.7% and mechanical engineering orders rose 3.7%, while automotive orders fell 3.8% and data processing, electronic and optical products dropped 7.8%.
Capital goods orders rose 2.2%, consumer goods increased 2.4% and intermediate goods gained 1.4%.
Foreign orders climbed 2.2%, helped by an 11.2% rise from the eurozone, while domestic orders were up 1.3%.
However, orders slipped 0.2% on a three-month basis between March and May, underlining continued volatility.
Germany's economy ministry said manufacturing orders appeared to be resuming the upward trend seen since the second half of 2025, but warned that geopolitical uncertainty around the Middle East remained elevated.
In the UK, business activity and confidence across the financial services sector slumped in the second quarter, according to the Confederation of British Industry.
Business volumes reversed sharply, with the weighted balance falling to -58% from +65% in the previous quarter.
Firms expect volumes to decline again over the next quarter, albeit at a slower pace, with a balance of -32%.
The downturn in the UK construction sector meanwhile eased slightly in June, although activity remained deeply in contraction.
The S&P Global UK construction PMI ticked up to 38.4 from a six-year low of 38.2 in May, but remained well below the 50 mark.
Construction output has now fallen every month since January 2025.
Finally on data, UK car registrations rose 11.4% in June to 213,166 units, the best performance for the month since 2019, according to preliminary figures from the Society of Motor Manufacturers and Traders.
Registrations by private buyers rose 12.5%, fleet deliveries increased 10.5% and the smaller business segment grew 17.1%.
easyJet ascends on Castlelake deal, chip plays in the red
In equity markets, easyJet surged 9.28% after the budget carrier accepted a sweetened 5.5bn offer from US firm Castlelake to take it private.
Morrison said corporate news had drawn attention in the UK, with easyJet's deal coming alongside ITV's agreement to sell its media and entertainment division to Sky, owned by Comcast, in a 1.6bn transaction.
"There's been renewed interest in UK [and] European financial assets as many are viewed as attractively priced, particularly when compared to US corporations," Morrison said.
Munnelly said the easyJet deal reinforced a recurring theme in UK markets.
"Overseas buyers continue to see value in London-listed assets, particularly where public-market valuations remain depressed relative to strategic or private-market interest," he said.
Elsewhere, ASML Holding slipped 0.37% despite Bernstein raising its US price target by more than 30% to $2,300, citing unprecedented expansion in logic and DRAM capacity driven by artificial intelligence.
BE Semiconductor Industries slumped 5.49% after media reports suggested that adoption of hybrid bonding, a key growth driver for the Dutch chipmaker, could be delayed.
Reporting by Josh White for Sharecast.com.
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