European Stocks Fall on Renewed Inflation Fears, Novartis Slumps on Drug Trial Setback

European shares declined on Tuesday, pressured by a sharp drop in Novartis stock and renewed inflation concerns as a surge in crude oil prices fanned fears of persistent price pressures.

The pan-European STOXX 600 index was down 0.2% to 648.41 points by 0705 GMT, following a subdued session on Monday due to a U.S. public holiday.

Inflation Fears Resurface as Oil Climbs

The broad-based market weakness was primarily driven by macroeconomic concerns. Germany’s DAX shed 0.3% and France’s CAC 40 slipped 0.4%, while London’s FTSE was reportedly flat, according to Reuters.

Investor sentiment soured as Brent crude futures climbed to $98.5 per barrel. The price increase followed threats from Iran to target energy infrastructure in the Gulf, escalating supply concerns. Rising energy costs are a key driver of inflation, and the move revived investor anxiety about the potential for higher-for-longer interest rates.

Novartis Tumbles on Second Drug Setback

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On the corporate front, Swiss pharmaceutical giant Novartis was a significant drag on the market, with its shares plummeting 8.8%.

The sell-off was triggered by news that its del-desiran drug for myotonic dystrophy failed to meet its primary endpoint in a late-stage trial. This announcement marked the company's second major drug development disappointment this week, following a separate setback for its experimental cholesterol drug, pelacarsen.

Other notable corporate movers included:

• Sandoz: Shares added 2.9% after the Swiss pharma firm announced a goal to more than double its net sales between 2025 and 2035.
• Poste Italiane: The stock was down 0.2% after the company sweetened its takeover offer for Telecom Italia.