After closing the last two sessions above 11,400 points and reaching nine-year highs, the Spanish IBEX 35 stock index lost this psychological level due to the uncertainty generated by the latest political and monetary news.

The results of the European elections showed a significant growth of Eurosceptic nationalists, which may complicate EU policy-making and attempts to deepen the bloc's integration over the next five years.

In France, President Emmanuel Macron unexpectedly called for early parliamentary elections after his party suffered a heavy defeat at the hands of the far-right National Rally party.

This news dragged the euro to a one-month low of $1.07485 and triggered widespread declines at the open of European equity markets.

Nor did the cold water that the stronger-than-expected U.S. jobs report brought to hopes that the Federal Reserve (Fed) would cut interest rates this year contribute to optimism.

Friday's data showed that employment rose by 272,000 jobs last month, versus expectations of 185,000 according to a Reuters poll, with markets reflecting a probability of around 50% for a rate cut in September, down from 70% on Thursday.

According to interest rate futures on LSEG's IRPR tool, markets currently expect a total of 36 basis points of rate cuts this year, which is just over 1 0.25 basis point cut, down from nearly 50 basis points--or at least two cuts--prior to the jobs data.

The move away from monetary easing may be confirmed this week with the U.S. inflation report on Wednesday and, more importantly, with the Fed's comments at the end of its meeting on Tuesday and Wednesday.

With no change in the Fed's interest rates (currently at 5.25%-5.50%), the focus will be on Chairman Jerome Powell's remarks and the update of the dot plot, a document that reflects where Fed members (anonymously) expect interest rates to be over the next few years.

"(...) we estimate that it could revise from the 3 cuts forecast for 2024 in March to just 2," said the securities house Renta 4.

"We recall that, in the 20-March 'dot plot', 9 of the 19 members considered that there could be less than 3 cuts this year, a number that could have increased in light of the latest price data. The key will therefore be Powell's message, and we will see if he modifies the consensus forecasts in terms of the amount and pace of rate cuts," these analysts added.

At 07:15 GMT on Monday, the selective Spanish stock market index IBEX 35 fell 106.00 points, or 0.93%, to 11,298.90 points, while the FTSE Eurofirst 300 index of large European stocks fell 0.71%.

In the banking sector, Santander lost 1.35%, BBVA fell 1.56%, Caixabank dropped 1.14%, Sabadell fell 0.99%, Bankinter dropped 0.61%, and Unicaja Banco lost 2.29%.

Among the large non-financial stocks, Telefónica fell 0.34%, Inditex dropped 1.14%, Iberdrola dropped 0.37%, Cellnex gained 0.18%, and the oil company Repsol lost 0.31%.

(Information by Tomás Cobos; edited by Javi West Larrañaga)