German Equities Weaken On Inflation Fears, ECB Decision Looms

German equity markets traded lower on Monday as investors weighed renewed inflation concerns ahead of the European Central Bank's upcoming monetary policy decision. Market sentiment was dampened by rising oil prices, with Brent crude futures climbing toward $98 a barrel amid geopolitical tensions in the Middle East and concerns over potential disruptions to energy transit through the Strait of Hormuz. Germany's benchmark DAX index retreated 75.88 points, or 0.29%, to 25,972.50 by midday. Notable laggards included Vonovia, Qiagen, Fresenius, and SAP, while select semiconductor and industrial shares like Infineon Technologies and MTU Aero Engines managed gains. Macroeconomic data presented mixed signals for the European economy. German industrial production contracted by 1.1% month-on-month in July, missing expectations and heavily weighed down by a 9.2% slump in automotive output. In contrast, revised figures for the broader eurozone showed second-quarter GDP expanded by 0.6% quarter-on-quarter and 1.2% year-on-year, outpacing initial estimates.