The pan-European STOXX 600 closed little changed at 612.79 points

European shares ended Monday’s session flat, ​constrained by a drop in luxury stocks, while stalled Iran-U.S. peace negotiations drove oil prices ‌higher and also kept investors cautious.

The pan-European STOXX 600 closed little changed at 612.79 points. Stock indexes moved in different directions, with Italian stocks edging 0.8% higher, while France’s CAC 40 slid 0.7%.

Luxury stocks led declines among sectors, declining 3.4% and ​were also the worst performing on the STOXX 600 this year. LVMH lost more than 4.4%, ​while Hermes and Burberry shed more than 3.3% each.

Berenberg analysts said that the conflict ⁠in the Middle East masked the reality that underlying demand globally was still weak, making the sector’s outlook fragile.

​Uncertainty rose after U.S. president’s rejection of Iran’s response to its peace proposal fuelled concerns ​that the 10-week-old war would drag on and continue to paralyse shipping through the Strait of Hormuz and keep oil prices elevated.

The energy price is going to remain elevated for a while and it feels to me the markets are just ​taking it a little bit for granted, said Jeremy Batstone-Carr, European strategist at Raymond James.

The real story is not ​actually in the crude price, but in the price of diesel and in the price of jet fuel. So, you’re ‌starting ⁠to see crack spreads widen, he said.

Travel and leisure stocks are among the worst performers this year, down more than 7%.

The war has shuttered the Strait of Hormuz, a vital waterway for a fifth of global energy flows, with soaring oil prices adding to concerns over the war’s impact on inflation and growth.

Oil-dependent Europe remains vulnerable, with ​markets still trading around ​4% below pre-war levels ⁠and lagging global peers that have rebounded on artificial intelligence-driven optimism.

Martin Kocher, a governing council member of the European Central Bank, warned that the ECB would need ​to adjust interest rates soon if the inflationary outlook did not significantly improve.