PARIS: European stocks were flat on Monday as investors awaited the outcome of US debt ceiling talks while assessing monetary policy outlook in the United States and Europe, with UK’s Dechra Pharmaceuticals slumping after a profit warning.

The pan-European STOXX 600 index was largely unchanged, after touching a more than one-year high on Friday. Germany’s blue-chip DAX dropped 0.3% after hitting an all-time high in the prior session.

President Joe Biden and top congressional Republican Speaker Kevin McCarthy were set to meet on Monday to discuss raising the federal government’s debt ceiling, just 10 days before the United States could face an unprecedented default.

“There’s always the risk that despite the positive developments, those negotiations might fall apart at the last minute and that’s what markets are concerned about,” said Andrea Cicione, head of research at TS Lombard.

Meanwhile, French ECB policymaker Francois Villeroy de Galhau noted that European Central Bank interest rate hikes are likely to peak out by summer’s end, but the issue was how long rates remained elevated rather than the exact level.

On the other hand, ECB Chief Economist Philip Lane flagged that the central bank’s policy was effective and investors appeared to remain confident in the bank’s ability to bring inflation back to its 2% target.

On the data front, euro zone consumer confidence rose by 0.1 point in May from the previous month.