May 18 (Reuters) - European shares sank on Monday, with oil prices rising and bonds extending their sell-off, as inflation worries continued with no signs of a deal between the U.S. and Iran.
German share price index DAX graph is pictured at the stock exchange in Frankfurt
The pan-European STOXX 600 fell 0.7% to 602.52 points, as of 0703 GMT, after ending the previous week lower. Germany's DAX and France's CAC 40 were off 0.5% and 1%, respectively.
A drone strike caused a fire at a nuclear power plant in the UAE, while Saudi Arabia reported intercepting three drones, with U.S. President Donald Trump warning that Iran must act "fast".
The U.S.-Israel war on Iran is in its third month, with Tehran and Washington unable to come to a resolution as the vital Strait of Hormuz remains shuttered. Rising energy prices have fanned inflation fears and led to expectations of rate hikes from global central banks.
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European equities, with the region's dependence on oil imports, have been unable to catch up to pre-war levels while global indexes have rebounded on AI-led optimism.
In early trading, AstraZeneca dipped 0.8%. The drugmaker's hypertension pill was approved in the U.S.
Sonova gained 4.1% after the world's biggest hearing aid maker forecast higher sales and earnings for the 2026/27 financial year.
(Reporting by Twesha Dikshit; Editing by Harikrishnan Nair)