LONDON - European shares fell in early trade on Monday, giving up some of their gains from the previous session, as volumes were hit by a UK stock markets holiday and energy stocks declined.
At 0717 GMT, the FTSEurofirst 300 index of top European shares was down 0.3 percent at 1,172.09 points after notching up a 1.8-percent gain on Friday.
The oil and gas sector, as measured by the DJ Stoxx European oil and gas index was the worst performer among the sectoral indexes with a 0.6-percent fall.
Total (TOTF.PA: Quote, Profile, Research, Stock Buzz) fell 1.1 percent and Royal Dutch Shell (RDSa.AS: Quote, Profile, Research, Stock Buzz) lost 0.7 percent, with oil trading slightly higher but having endured a 5.4-percent fall on Friday, its steepest since 2004.
Falling oil prices are bad for heavily weighted energy stocks but, in the longer term, positive for the broader market as they take the edge off inflation fears.
"The clearly positive sign is that the raw material oil and food prices are on the decline and the inflation outlook is more favourable," said Tuomas Komulainen, Helsinki-based strategist at Danske Market Securities.
"This should lead to lower inflation figures in both the euro zone and the United States in August and September and the situation is then easier for the ECB and the Fed," he said.
"On the negative side is the euro zone economy slowing more than expected, but overall things are slightly more positive for equities."
U.S. Federal Reserve Chairman Ben Bernanke on Friday said that the stronger dollar and lower oil prices, along with the weak economy, should curb inflation, in a hint that interest rates would stay on hold, though he warned the inflation outlook was "highly uncertain".
At 0717 GMT, the FTSEurofirst 300 index of top European shares was down 0.3 percent at 1,172.09 points after notching up a 1.8-percent gain on Friday.
The oil and gas sector, as measured by the DJ Stoxx European oil and gas index was the worst performer among the sectoral indexes with a 0.6-percent fall.
Total (TOTF.PA: Quote, Profile, Research, Stock Buzz) fell 1.1 percent and Royal Dutch Shell (RDSa.AS: Quote, Profile, Research, Stock Buzz) lost 0.7 percent, with oil trading slightly higher but having endured a 5.4-percent fall on Friday, its steepest since 2004.
Falling oil prices are bad for heavily weighted energy stocks but, in the longer term, positive for the broader market as they take the edge off inflation fears.
"The clearly positive sign is that the raw material oil and food prices are on the decline and the inflation outlook is more favourable," said Tuomas Komulainen, Helsinki-based strategist at Danske Market Securities.
"This should lead to lower inflation figures in both the euro zone and the United States in August and September and the situation is then easier for the ECB and the Fed," he said.
"On the negative side is the euro zone economy slowing more than expected, but overall things are slightly more positive for equities."
U.S. Federal Reserve Chairman Ben Bernanke on Friday said that the stronger dollar and lower oil prices, along with the weak economy, should curb inflation, in a hint that interest rates would stay on hold, though he warned the inflation outlook was "highly uncertain".
