European shares have lost ground as fears of possible US involvement in the Middle East conflict kept investors on the edge, while the Federal Reserve’s inflation warning added to jitters, Reuters reported.

The pan-European STOXX 600 was down 0.6 per cent at 537.37 points at 1:26 PKT, after touching its lowest in more than a month. Trading is expected to be thin as US markets are shut for a public holiday.

The conflict has impacted oil prices, whichrose on the day and boosted the energy sector .SXEP by 0.6pc. Conversely, travel and leisure .SXTP stocks fell 1.5pc, leading broader declines, as they took a hit from soaring oil prices.

“Higher oil prices may have a lasting impact on inflation and subsequently the ECB’s monetary policy and growth, but if they get to the point where the Strait of Hormuz is affected, the situation might be more complicated,” said Jacobo Ortega, chief investment officer for Europe at Santander Asset Management.