Spain's benchmark IBEX 35 opened the week with slight losses as investors remain concerned over the implications of a prolonged war in the Middle East. The conflict has already pushed oil prices toward a record monthly surge, heightening the threat of an inflationary spike and the risk of recession across much of the globe.

The war has spread throughout the Persian Gulf region, resulting in thousands of casualties, causing the most significant disruption to energy supplies ever recorded, and weighing on the global economy.

U.S. President Donald Trump stated on Sunday that the U.S. and Iran have maintained "direct and indirect" contacts and that the new Iranian leadership has proven to be "very reasonable," even as more American troops arrived in the region and Tehran warned it would not accept any humiliation.

Hopes for peace currently rest on Pakistan, which announced it was preparing to host "meaningful talks" between Washington and Tehran in the coming days.

"Looking at the week as a whole, attention will remain largely monopolized by developments in the Middle East and their impact on oil and gas prices," analysts at Renta 4 noted in a client memo.

"The coming days should serve to clarify whether the possibility of ending the war is realistic (or not) in the short term," they added.

On the macroeconomic front, markets will be monitoring Eurozone economic sentiment data on Monday (0900 GMT) and German inflation (1200 GMT). For the remainder of the week, focus will shift to Eurozone inflation on Tuesday, U.S. ISM manufacturing on Wednesday, and the official March U.S. jobs report on Friday.

At 0705 GMT on Monday, the Spanish IBEX 35 was down 7.20 points, or 0.04%, at 16,795.30 points, extending its losing streak to a third consecutive session. With only Tuesday's session remaining, the Madrid index was on track for a monthly loss of 8.4% in March, its steepest since June 2022.

In the banking sector, Santander shed 0.84%, BBVA retreated 0.34%, Caixabank eased 0.25%, Sabadell fell 0.40%, Bankinter dropped 0.30%, and Unicaja Banco lost 0.64%.

Among non-financial heavyweights, Telefónica gained 0.27%, Inditex advanced 0.22%, Iberdrola rose 0.78%, Cellnex fell 0.30%, and oil major Repsol climbed 1.29%.

Among other utilities, Naturgy added 1.01%, while Endesa advanced 0.95%.

The pan-European FTSE Eurofirst 300 index was down 0.18%.

(Reporting by Benjamín Mejías Valencia; editing by Jorge Ollero Castela)