European markets closed slightly lower on Monday as investors monitored rising diplomatic tensions between the U.S. and China, while travel stocks tumbled after the U.K. imposed quarantine measures on people returning from Spain.
The pan-European Stoxx 600 ended down around 0.3%, with travel and leisure stocks tumbling more than 3.3% to lead losses while basic resources climbed 1.3%.
European stocks struggled to follow the overnight action in Asia, where stocks broadly advanced after data showed China's industrial profit soared in June as the economy looks to bounce back from coronavirus-induced shutdowns.
However, caution remains after a fraying of diplomatic relations between the U.S. and China, which saw the U.S. consulate in Chengdu shut down on Monday in compliance with a retaliatory measure from Beijing, after Washington ordered the closure of the Chinese consulate in Houston.
Tensions between the world's two largest economies, along with lingering fears about the coronavirus pandemic in the U.S. and elsewhere, also pushed gold prices to new record highs in the early hours of Monday as investors sought safety. Spot gold touched as high as $1,943.9275 per ounce during Asia Pacific trading hours.
Stateside, White House Chief of Staff Mark Meadows told reporters Sunday that Trump administration officials and Senate Republicans had reached an "agreement in principle" on a fresh coronavirus relief bill, which will likely be presented Monday afternoon and is expected to total around $1 trillion.
German business sentiment saw a further recovery in July, with the Ifo Institute's business climate index on Monday climbing more than expected to 90.5 from an upwardly revised 86.3 in June.
Back in Europe, Tui on Sunday announced that it would cancel all holidays from the U.K. to mainland Spain until August 9 after the British government imposed a two-week quarantine on anyone returning from the Mediterranean country. Despite a surge in new cases on the mainland, the Spanish foreign ministry insisted Sunday that its outbreak is under control. Europe's largest holiday firm saw its shares plunge 11%.
Ryanair on Monday reported a net loss of 185 million euros ($216.4 million) for the first quarter of its fiscal 2021, slightly above market expectations, and warned that the next 12 months will be a "very challenging year." The Irish low-cost airline's shares fell almost 4%.
Airline stocks tumbled across the board on Monday after the U.K. quarantine decision, with easyjet and British Airways parent IAG both falling around 8%, respectively, while Lufthansa shed 5%. Cruise operator Carnival also dropped more than 8%.
At the top of the European blue chip index, British miner Polymetal International climbed 7%.