Oil Price Surge Weighs on European Markets Amid Inflation Concerns

European shares dipped on Monday as higher oil prices fueled inflation concerns and bolstered expectations that the European Central Bank may need to raise interest rates beyond this week's meeting. The pan-European STOXX 600 index fell by 0.1% to 649.98 points at 0850 GMT, while the Swiss main index dropped 1.2%. Novartis shares declined 3.4% after its cholesterol drug failed in a closely watched study.

The energy sector saw some gains, with stocks advancing 1.2% as Brent crude futures rose by more than $1 a barrel due to heightened concerns of supply disruptions. The US and Iran exchanged strikes on vessels sailing through the Strait of Hormuz.

Investor morale in the euro zone rose to its highest reading in over four years, according to a survey released Monday. Meanwhile, fiscal concerns ahead of next year's election sent French stocks to two-month lows last week. Deutsche Bank now expects the ECB to follow a September rate hike with an additional quarter-point increase in December.