European stock markets closed mostly lower on monday as rising government bond yields and continued geopolitical tensions outweighed support from a weaker us dollar and reduced expectations of another federal reserve interest rate hike. the stoxx europe 600:uropean stock markets closed mostly lower on Monday as rising government bond yields and continued geopolitical tensions outweighed support from a weaker US dollar and reduced expectations of another Federal Reserve interest rate hike. The STOXX Europe 600, which represents around 90% of the market capitalization of developed European equity markets, fell 0.22% to 656.41 points.

According to Anadolu Agency, European equities had started the session on a firmer footing, supported by gains in technology and mining shares, before surrendering ground as sovereign borrowing costs increased and investors remained cautious over developments in the Middle East. Oil prices rose amid uncertainty surrounding the US-Iran conflict and disruptions to regional energy flows, with international benchmark Brent crude trading around $89 per barrel. Higher energy costs renewed concerns over inflation and the outlook for European economic growth.

Spain's IBEX 35 posted the sharpest loss among the major European indices, falling 0.87% to 19,981.9 points. France's CAC 40 dropped 0.66% to 8,579.6, while Germany's DAX 40 declined 0.38% to 26,338.61. The UK's FTSE 100 decreased 0.28% to finish at 10,720.3 points. Italy's FTSE MIB bucked the broader negative trend, edging up 0.01% to 53,586.98.

Investors also assessed the outlook for US monetary policy following weaker-than-expected retail sales and labor-market figures, which reduced expectations that the Fed would raise interest rates again in the near term. The dollar index fell to around 99.19, its lowest level in about 10 weeks, as markets scaled back their expectations for further US monetary tightening. Investors are now awaiting the minutes of the Fed's July meeting for additional indications about the future path of interest rates. The euro appreciated about 0.16% against the dollar, with the euro-dollar exchange rate trading around 1.1589.