Europe Stocks Slide Amid Iran Tensions and Inflation Fears

European stocks dipped on Monday as fresh US-Iran military strikes pushed oil prices and bond yields higher, with investors bracing for further policy tightening amid inflation concerns.

The pan-European STOXX 600 index fell 0.1% to 655.54 points by 0712 GMT, while Germany's DAX dropped 0.7%, the most among regional indexes, ahead of key inflation data from Europe's largest economy that could offer clues on the European Central Bank's rate path.

Investors have largely locked in expectations of a September ECB rate increase, but Chris Weston, head of research at Pepperstone Group, noted that European inflation dynamics coming through this week may 'massage around the edges' these probabilities.