Frankfurt (Reuters) - After the recent rally, investors on the European stock markets are putting their heads down at the start of the week.

The Dax fell by 0.4 percent to 15,855 points on Monday; the EuroStoxx50 lost 0.2 percent to 4330 points. The leading German index was held back in particular by massive losses at Bayer. Following another setback in the glyphosate trials in the USA, the pharmaceutical and agrochemical company's biggest drug hope Asundexian also flopped in a study. Bayer shares fell by more than 21 percent at the peak to their lowest value in more than 14 years; the stock market value of the aspirin manufacturer shrank by around 8.7 billion euros as a result.

"This is a severe setback for Bayer. Asundexiane was the pearl in Bayer's pharma pipeline and without the active ingredient, the pharma division is left without sustainable growth," said fund manager Markus Manns from major shareholder Union Investment. Jürgen Molnar, capital market strategist at Robomarkets, believes that Bayer's recent run of bad luck is likely to keep it busy for a while: "On the one hand, potential sources of income are disappearing, and on the other hand, there are new potential costs." This combination is also likely to have a significant impact on the share price in the coming weeks.

In the USA, US futures also pointed to a subdued start to trading. US investors were waiting for further indications as to when the Fed might start cutting interest rates. The easing price pressure in the US had recently fueled bets that interest rates would fall again next year and driven up share prices.

DOLLAR WEAKENS - OIL PRICE RISES

On the currency market, investors continued to bet on an end to the US interest rate hike cycle. The dollar index lost up to 0.4 percent to 103.47 points, its lowest level since the beginning of September. At 1.0940 dollars, the euro climbed to its highest level since the end of August. According to Commerzbank, the strength of the euro could continue if the European Central Bank cuts its key interest rates much later and much more slowly than the market currently expects. Bundesbank President Joachim Nagel recently did not even think it was clear whether the ECB had already reached the interest rate peak. In October, after ten interest rate hikes in a row, the ECB decided to pause interest rates in view of the weakening economy and significantly falling inflation figures.

Meanwhile, speculation about production cuts by Opec+ drove oil prices up further on the crude oil market. North Sea Brent and US WTI oil each rose by more than two percent to 82.38 and 77.50 dollars per barrel respectively. According to a Reuters report on Friday, the producer group, which brings together the Organization of the Petroleum Exporting Countries (Opec) and other producers such as Russia, is expected to consider further production cuts at its meeting on 26 November. Oil prices have fallen by almost 20 percent since the end of September.

Among the individual stocks, Italian banks stood out on the Milan stock exchange. The upgrading of the outlook by the rating agency Moody's for the future rating of Italian bonds helped the shares to make gains. The shares of BMPS, BPER, Banco BPM, Intesa Sanpaolo and UniCredit each rose by around one percent. On the bond market, the gap between the yields on ten-year Italian and German bonds reached a fresh two-month low. In its review of the creditworthiness of the eurozone's third-largest economy, Moody's left its "Baa3" rating unchanged on Friday and raised its outlook to "stable" from the previous "negative".

(Report by: Daniela Pegna and Stefanie Geiger, edited by Olaf Brenner. If you have any questions, please contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and the economy) or frankfurt.newsroom@thomsonreuters.com (for companies and markets).