Banks, Oil Drag Euro Shares Lower

European shares fell on Monday, led by banks and food producers, while a rally in the oil price to new record highs supported commodity shares but rekindled concern about inflation.

The FTSEurofirst 300 index of top European shares fell 0.43 percent to an unofficial close of 1,261.87 points, having fallen earlier by as much as 1.1 percent to a session low of 1,254.04.

Banks were the worst performing sector, weighed down particularly by continental European banks. Credit Suisse fell 0.5 percent, Deutsche Bank lost 1.1 percent and Santander fell 2 percent.

Barclays featured among the day's main gainers, rising by as much as 12.6 percent at one point, after saying it planned to sell billions of pounds of shares to new and existing shareholders.

The price of crude oil to a record just below $140 a barrel, even after top crude exporter Saudi Arabia said it would raise output, weighed on the broader market in late trade.

"(It) almost beggars belief. The Saudis say they will increase supply and yet the oil price has responded with another new high. That is thoroughly negative for everything except the basic resources sectors as far as I can see," said Investec strategist Roger Cursley.

"Everything else now, including plays on emerging markets, is taking a hit on the back of that,” he said.