FRANKFURT (dpa-AFX) - Concerns over rising interest rates continued to drag down real estate stocks on Monday. In the Dax, Vonovia shares fell two percent, slipping below the 20-euro mark for the first time since late October 2023. Below this level, they are approaching their March 2023 low of just over 15 euros, hit during the previous rate-hiking cycle.

Monday's losses also extended to German mid- and small-cap stocks in the MDax and SDax indices. Shares in Aroundtown, TAG Immobilien, LEG, and Grand City Properties shed between 1.9 and 4 percent.

While the war in Ukraine and its inflationary impact had previously driven the upward rate cycle, fears are now mounting of a repeat due to the price-pushing effects of the conflict involving Iran. Only on Friday, the US jobs report fueled speculation that the Federal Reserve will soon raise its benchmark interest rate.

In the eurozone, investors are bracing for an ECB rate hike this Thursday. According to market observer Christian Nolting of Deutsche Bank, this move is 'all but certain'. Markets are even pricing in a second rate hike by October - and a third with a 50 percent probability. However, he expects a more measured approach, with eurozone rates peaking at no more than 2.50 percent.

Sentiment in the real estate sector is typically highly sensitive to interest rate outlooks, as higher rates generally cool the property market and increase borrowing costs for companies./tih/niw/jha/