By Ankika Biswas
(Reuters) - European shares fell on Monday, led by losses in the continent's largest copper producer, Aurubis AG, while fears that the global rate-hiking cycle may persist for longer kept investors on edge.
The pan-European STOXX 600 was down 0.8% at 0913 GMT, pulling back from a nine-month high it hit on Friday, the last day of a two-week rally on optimism that the United States and the euro zone would likely avoid a recession.
All the sector indices were in the red, with rate-sensitive real-estate and technology stocks bearing the brunt of selling pressure, dropping around 2%.
Concerns around elevated Sino-U.S. geopolitical tensions also weighed on sentiment, with China-exposed luxury goods makers Hermes International (EPA:HRMS), LVMH and Compagnie Financiere Richemont SA falling over 1% each.
Strong U.S. job growth and a rebound in services industry activity last month, according to data released on Friday, rekindled fears of a prolonged period of high interest rates, two days after Fed Chair Jerome Powell acknowledged easing inflation as the U.S. central bank hiked rates by a quarter-point.
"Despite all the rate hikes from the Fed, the labour market continues to perform extremely well, which could change market perspective of central banks lowering rates somewhere later this year or early next year," said Teeuwe Mevissen, senior market economist at Rabobank.
Indeed, the European Central Bank sounded relatively more hawkish than its peers last week after it raised rates by 0.5% and explicitly signalled another hike, reaffirming its commitment to battle stubborn price pressures.
Further, data showed that German industrial orders rose by a steeper-than-expected 3.2% on a monthly basis in December. The German DAX was down 0.9%.
Germany's Aurubis AG, which is not part of the DAX, dropped 5.6% and was on track for its steepest single-day fall in four months following an around 24% fall in quarterly earnings due to high energy prices and inflation.
In France, Eurazeo (EPA:EURA) fell 1.7% after the private equity and investment company named a new executive board and said its current chief executive, Virginie Morgon, would leave her role.
Meanwhile, Rovio Entertainment jumped 13.2% after the producer of the 'Angry Birds' video game said it had begun preliminary non-binding talks with parties, including Playtika Holding Corp, regarding a potential tender offer.
Banco BPM, Italy's third-largest bank, gained over 1% on plans to generate greater value longer-term from its retailers' payment business as it explores strategic options for the unit.