European stock markets experienced a slight pullback from record highs on Monday as investors processed a series of merger and acquisition announcements.

The Stoxx Europe 600 index closed down 0.4%, with utilities and healthcare stocks leading the declines, while financial services and banking shares were among the top performers.

The UK's M&A scene saw notable activity. ITV Plc shares rose as much as 2.4% before paring gains, after the company agreed to sell its media and entertainment division to Sky. UK budget airline easyJet surged 9.3% to its highest level since 2022 after accepting a takeover offer from private equity firm Castlelake LP.

The Stoxx Europe 600 had advanced over the past four weeks, supported by falling oil prices which eased inflation concerns and improved the outlook for European economic growth. A global rotation of funds away from technology stocks into other sectors has also buoyed European markets. The upcoming second-quarter earnings season is seen as a key test for the sustainability of this rally.

"There is a clear momentum building, particularly around the commodity complex, as these resources are needed for data centers, defense spending, and infrastructure build-out," said Kokou Agbo-Bloua, Global Head of Research at Societe Generale Corporate and Investment Banking. "I do think there is a concentration risk in the US market, and from a diversification perspective, Europe offers a benefit."