This was CNBC's live blog covering European markets.

European stock markets close flat

European stock markets have ended the trading day unchanged.

The pan-European Stoxx 600 provisionally ended flat, with the FTSE 100 up by 0.17%. Germany's DAX hits another record high, rising 0.6%, while France's CAC 40 falls 0.04%

While equity markets appear to be muted, a lot of action was seen in the fixed income and currency markets.

U.S. Treasury yields spiked on Monday after Moody's downgraded the U.S.′ credit rating, citing fiscal concerns. Meanwhile, the British pound rallied after the UK's breakthrough deal with the EU.

On Tuesday, British companies Vodafone and bakery chain Greggs, insurance giant Swiss Life, and Swedish industrial conglomerate Lagercrantz will be reporting the first-quarter results.

— Ganesh Rao

Why do bond yields matter?

When an investor buys a government bond, they are effectively lending cash to that government, with the promise that their money will be returned in full at the end of the maturity period.

The investor is entitled to regular payments for the duration of the loan, with the value of those payments determined by the bond yield.

The yield is inversely related to the price of the bond — so when a bond sells off, its yield moves higher.

Major price swings in government bonds matter. If government bonds prices fall – meaning yields spike – it makes it more expensive for the government to borrow cash. Rising government bond yields can also spill over into rates on other forms of lending, making it more costly for companies and households to borrow money, ultimately impacting the wider economy.

In markets like the U.S. and the U.K., government bonds have historically been considered safe investments, as the governments were considered highly unlikely to default on their debts.

However, both Britain and America have seen volatility in government borrowing costs this year, with yields on the benchmark U.S. 10-year Treasury spiking in April after President Donald Trump unveiled his full list of reciprocal tariffs.

When the president later paused those tariffs for 90-days, he told reporters that "the bond market was getting the yips," but insisted the market moves had not influenced his decision to put his country-specific import duties on hold.

The U.K., meanwhile, saw bond market turmoil in 2022, when the Bank of England was forced to intervene, selling billions of dollars' worth of long-dated government bonds after then-Prime Minister Liz Truss's raft of unfunded tax cuts spooked the pension funds that owned the bonds and sparked a selloff.

The central bank said its intervention was intended to prevent an "unwarranted tightening of financing conditions and a reduction of the flow of credit to the real economy."

— Chloe Taylor

Europe stocks continue moving lower as U.K. and EU reset relations

It's shortly after midday in London, and European stocks are continuing their downward trajectory since the U.K. and European Union came to a deal to reset post-Brexit relations.

At 12:17 p.m., the Stoxx 600 was down 0.6%. London's FTSE 100 and France's CAC 40 were lower by 0.5% and 0.7% respectively. Germany's DAX shed 0.1%.

Most major sectors are still in negative territory.

— Sawdah Bhaimiya

British government’s long-term borrowing costs spike

Zooming in further on the bond market's reaction to the U.K.-EU deal unveiled this morning, long-date gilts — U.K. government bonds — are seeing significant moves.

The yield on the 30-year gilt added over 8 basis points by 11:50 a.m. London time — off earlier highs — while the 20-year gilt yield was almost 8 basis points higher.

Earlier this year, the U.K. government's long-term borrowing costs hit multi-decade highs.

The benchmark 10-year gilt yield was over 6 basis points higher, while the yields on short-term 5- and 2-year gilts were up by 4 and 2 basis points, respectively.

Bond yields and prices move in opposite directions. When confidence in a government's ability to service its debts falls, the price of the bonds it issues moves lower and the yield rises, as investors demand a higher rate of return on their loans to the government.

— Chloe Taylor

30-year Treasury passes 5% after Moody’s downgrades U.S. credit rating

U.S. Treasury yields spiked on Monday after Moody's downgraded the U.S.′ credit rating, citing fiscal concerns.

At 4:46 a.m. ET, the 30-year Treasury yield was up over 10 basis points to 5.021%. The 10-year yield also rose 10 basis points to reach 4.542%. Meanwhile, the 2-year Treasury yield was up over 2 basis points, reaching 4%.

One basis point is equivalent to 0.01%, and yields and prices move in opposite directions.

Read the full story here.

— Sawdah Bhaimiya

U.K. bond yields rise after UK-EU deal

British government bond yields are also on the rise in the wake of the EU and the U.K. agreeing to reset their post-Brexit relations.

Yields on 10-year U.K. government bonds, known as gilts, were up by around 7 basis points at 9:58 a.m. in London.

Bond yields and prices move in opposite directions.

— Chloe Taylor

British pound rallies after UK’s breakthrough deal with EU

The British pound was 0.7% higher against the U.S. dollar at 9:01 a.m. in London, after the U.K. came to an agreement with the European Union to reset relations.

Sterling was trading at around $1.336.

The euro also logged gains against the greenback, adding 0.7% to trade at around $1.124. Sterling was meanwhile flat against the euro.

— Chloe Taylor

UK and EU agree to post-Brexit reset deal, sources tell CNBC

The U.K. and European Union finally agreed to reset relations Monday, sources told CNBC, after Britain's acrimonious exit from the EU in 2020.

U.K. Prime Minister Keir Starmer is hosting European Commission President Ursula von der Leyen and other senior officials in London for a much-anticipated summit which is taking place against a backdrop of unpredictable global dynamics — led by the U.S.

Read the full story here.

 — Holly Ellyatt

Volkswagen shares drop 5%

Shares of Volkswagen were down 5% at 8:36 a.m. in London on Monday, taking the German carmaker to the bottom of the regional Stoxx 600 index.

That came after investors demanded a shake-up of how the company was being run at its annual general meeting on Friday, according to news agency Reuters.

— Chloe Taylor

European stocks open lower

European shares opened in negative territory on Monday, with the Stoxx 600 down 0.4% shortly after the opening bell.

Most sectors and all major bourses saw losses, with the FTSE 100 and the CAC 40 shedding 0.5%, while Germany's DAX traded 0.2% lower.

— Chloe Taylor

Prosus launches 4.1 billion euro bid for Just Eat Takeaway

Dutch tech investor Prosus on Monday launched its cash offer to acquire delivery giant Just Eat Takeaway.

Prosus reiterated the offer of 20.30 euros ($22.8) per share, which would value Just Eat Takeaway at roughly 4.1 billion euros — around $4.6 billion at current exchange rates — and represented a premium of 63% to the company's closing price on Feb. 21.

The deal was first announced in February.

The offer period for the acquisition begins on Tuesday, with the deal expected to be completed by the end of 2025.

"Europe is at a pivotal moment to create a new generation of AI-powered tech champions, and this transaction is a unique opportunity to lead that transformation," Prosus CEO Fabricio Bloisi said in a statement on Monday.

Jitse Groen, CEO and founder of Just Eat Takeaway.com, said in a statement alongside the offer launch that the company is recommending that shareholders tender their shares and vote in favor of the takeover at its Extraordinary General Meeting in July.

— Chloe Taylor

Spirits maker Diageo forecasts $150 million hit from tariffs

Spirits maker Diageo said Monday that it expects to take a $150 million hit annually from U.S. President Donald Trump's U.S. tariffs while simultaneously launching a $500 million cost savings program.

The owner of Johnnie Walker and Casamigos said the estimated impact is based on the assumption that U.S. tariffs on U.K. and EU imports remain at 10%, and that those from Mexico and Canada remain exempt under the United States-Mexico-Canada Agreement. It added that it saw no material impact from tariffs on China.

Diageo said it expects to be able to mitigate around half of those costs under its existing processes "before any pricing" measures.

The company also announced a $500 million cost savings program over three years which it said would enable "reinvestment in future growth and improved operating leverage."

That comes as the company reported a 5.9% rise in third-quarter organic net sales and reiterated its full-year guidance.

— Karen Gilchrist

Ryanair CEO touts airline’s ‘strong position’ in Europe as profit slumps 16%

Budget airline Ryanair reported full-year profit after tax of 1.61 billion euros ($1.8 billion) on Monday, down 16% year-on-year but slightly above analyst expectations of 1.6 billion euros, according to FactSet.

Total revenue for the year rose 4% to 13.95 billion euros, above the 13.89 billion euros anticipated by analysts.

Ryanair said its average fare had dropped by 7% throughout the course of 2024, which drove traffic up by 9% year-on-year to a record 200 million passengers.

Speaking to CNBC's "Europe Early Edition" on Monday, Ryanair CEO Michael O'Leary described the airline's fiscal year as "very difficult," citing an online travel agent boycott in the spring of last year, as well as delivery delays of Boeing aircraft.

He argued the airline had "come through that very well."

"We've reported about 1.61 billion [euros] net profit in a year when average fares fell by 7%," he said, noting that the company's operating costs had remained flat. "The gap between us and every other airline in Europe is widening in terms of costs. That puts us in a very strong position."

— Chloe Taylor

What to keep an eye out for today

European markets on Monday are likely to be focused on a number of geopolitical events that affect the region.

First, there's the much-anticipated U.K.-EU summit taking place in London on Monday. It's expected that British Prime Minister Keir Starmer and European Commission President Ursula von der Leyen will announce a new defense and security pact as well as further deals on cutting red tape, youth mobility and easing trade restrictions. Critics say the British government risks reversing Brexit.

Later, U.S. President Donald Trump will be holding a call with Russia's President Vladimir Putin. Both leaders decided to skip peace talks that were set to be held in Turkey last week. Both Russia and Ukraine blame each other for the failure to reach a ceasefire deal.

— Holly Ellyatt

European markets: Here are the opening calls

Here are the opening calls ahead of the new trading week:

European bourses are expected to open in mixed territory on Monday, with London's FTSE expected to open 5 points lower, Germany's DAX up 18 points at 23,766, the French CAC 40 up 25 points at 7,872 and Italy's FTSE MIB up 91 points at 40,133, according to data from IG.

— Holly Ellyatt