European shares were pinned below record highs on Monday, as the global spread of the Delta variant of the novel coronavirus raised fears of a stunted economic recovery, although Morrisons jumped as a takeover battle for the British firm heated up.

The pan-European STOXX 600 was down 0.3pc, with auto and travel stocks being among the biggest decliners.

Mining stocks were among the rare gainers, jumping 0.9pc and tracking metals prices after a US jobs report last week signalled that the domestic economic rebound remained intact but did not yet warrant an immediate withdrawal of monetary stimulus.

The report also lifted Asian equities to an all-time high earlier in the session after a record close for US equities on Friday.

"European markets may very well be turning cautious sooner (than the US markets) as the Delta variant upsets the narrative of a smooth, unfettered recovery from here," said Vishnu Varathan, head of economics and strategy at Mizuho Bank.

"Whether the (European Central Bank) chimes in on these risks and perhaps goes on to outline symmetric inflation goals, with some give either way, will be interesting to watch."

The benchmark STOXX 600 has struggled to reclaim an all-time high hit in mid-June as the jump in virus cases raised the spectre of new travel restrictions, while a recent spike in inflation has sparked fears of a quick tapering in monetary stimulus despite assurances to the contrary from the ECB.

After the central bank kept its policy unchanged last month, ECB President Christine Lagarde said on Friday the euro zone economy was beginning to rebound from the pandemic-induced slump, but the recovery remained fragile.

All eyes on Monday will be on the bloc's business activity data for June, due at 08:00 GMT.

French shares fell 0.4pc as Health Minister Olivier Veran warned France could be heading for a fourth wave of the pandemic due to the Delta variant.

Technology stocks slipped 0.5pc, tracking a slide in Chinese peers amid concerns over Beijing's crackdown on ride-hailing giant Didi Global and scrutiny of other platform companies in the country.

Shares of Morrisons jumped 11.4pc to a near eight-year high after US private equity company Apollo Global Management said it was considering a possible offer for the British supermarket group. Morrisons on Saturday agreed to a £6.3bn takeover with another group.

Trading volumes are expected to be subdued with US markets closed for an extended 4th of July weekend.