By Shreyashi Sanyal

(Reuters) – European shares inched lower in choppy trading on Monday, as continued fighting in Ukraine weighed on investor sentiment, while gains in energy stocks kept the losses in check.

The pan-European STOXX 600 dipped 0.1% after posting its biggest weekly percentage gain since November 2020 on Friday.

Investors were closely tracking the war in Ukraine, with European Union governments mulling an oil embargo on Russia as they gather this week with U.S. President Joe Biden for a series of summits aimed at hardening their stance against Moscow.

The news also sparked a rally in oil prices. Brent crude futures rose more than $3 to trade above $111 a barrel, lifting the European oil & gas sector by 1.9%. [O/R]

“European crude embargo is expected to be put on the table once more, with the possibility that more than a million barrels of Russian oil a day will be snubbed,” said Susannah Streeter, a senior investment and markets analyst at Hargreaves Lansdown.

“Given that the Netherlands and Germany combined received around a quarter of Russia’s crude and light oil exports, demand would shoot up for crude supplies from OPEC+ nations.”

Oil exporters-heavy London’s FTSE 100 led gains among its continental peers, rising 0.5%. France’s blue-chip index was flat, while Germany’s DAX fell 0.1%.

U.S. Federal Reserve Chairman Jerome Powell was due to speak at the National Association for Business Economics Conference at 1600 GMT on Monday, while at least half a dozen other policymakers were set to speak through the week.

Investors will keenly watch the comments which come after a rather well-received start to monetary tightening cycle by the Fed as the central bank hiked U.S. interest rates for the first time since 2018 last week.

“For now, central banks remain focussed on bringing down inflation and containing any second-round effects on wages and prices,” said Neil Shearing, group chief economist at Capital Economics, adding that the war in Ukraine had not deterred central bankers from their plans to tighten policy.

Julius Baer rose 0.2% after it said it had credit exposure to a low-single-digit number of clients subject to the recently introduced sanctions on the Russian market.

French train maker Alstom fell 0.9% after Spanish state-owned railway operator Renfe said a software glitch disrupted most suburban trains in the city of Madrid as well as some medium- and long-distance services.

Meanwhile, data showed German producer prices maintained their record-breaking rise in February, jumping 25.9% year-on-year mainly because of energy prices.

(Reporting by Shreyashi Sanyal in Bengaluru; Editing by Subhranshu Sahu)