European shares fall on caution ahead of cenbanks' rate decisions

(Reuters) - European shares fell on Monday, as investors braced for interest rate decisions from the U.S. Federal Reserve and the European Central Bank due this week, while rising COVID-19 infections in China after restrictions were eased also weighed on sentiment.

The continent-wide STOXX 600 index was down 0.4% at 0805 GMT.

The index posted its first weekly drop after a seven-week rally on Friday, as fears of an impending global recession from aggressive rate hikes countered optimism around the easing of strict COVID-19 curbs in China.

Investor focus on Monday also turned to a surge in COVID-19 infections in China following loosening of the restrictions, with industrials and some China-exposed luxury firms such as LVMH and Hermes International among biggest drags on the STOXX 600.

On the other hand, London Stock Exchange rose 4.5% after Microsoft agreed to buy about 4% equity stake in the UK bourse operator as part of a deal to migrate its data platform into cloud.

Shares of Sanofi SA rose 1.9% after the French drugmaker on Sunday said it was no longer in discussions to buy Horizon Therapeutics.

(Reporting by Amruta Khandekar; Editing by Rashmi Aich)