STOXX 600 Slips Amid Middle East Tensions and AI Stock Selloff

Europe's STOXX 600 index faces a two-week low triggered by Middle East tensions and an AI stock selloff. Italian bank Monte dei Paschi di Siena sees gains after a takeover bid from Intesa Sanpaolo. Meanwhile, investors keenly await the European Central Bank's rate decision amid economic uncertainties.

The pan-European STOXX 600 index fell to a two-week low on Monday, driven by escalating tensions in the Middle East and a global selloff in AI stocks. The index slipped 0.7% to 618.42 points, aligning with a downturn in all major regional indexes.

A spike in crude oil prices by over 4% following conflicts between Israel and Iran added to existing anxieties. Energy price-sensitive stocks, including airlines like Lufthansa and Air France, saw declines of around 2% due to fuel shock concerns.

In a positive turn for Italy's banking sector, Monte dei Paschi di Siena jumped 10.7% following a €30.6 billion takeover bid from Intesa Sanpaolo. Elsewhere, economist eyes remain fixed on Thursday's interest rate decision by the European Central Bank, with a 25-basis-point hike currently anticipated.