European stock markets were in the red as fears over the spread of the delta variant mount in the UK, Europe and US. Several countries including Japan, South Korea and Australia also reimposed tighter restrictions.

The FTSE 100 (^FTSE) was down over 0.7% around lunchtime in London, France’s CAC (^FCHI) was 0.4% lower, and the DAX (^GDAXI) fell 0.2% in Germany.

Travel companies are weighing on the FTSE with British Airways parent International Consolidated Airline Group (IAG.L) declining 2.6%, while jet engine maker Rolls-Royce (RR.L) slumping 4%. 

Mining stocks weighed London's bluechip index, with Antofagasta (ANTO.L) crashing 3.2%, Evraz (EVR.L) falling 2.6%, Anglo America (AAL.L) declining 2.4% and Glecore (GLEN.L) dipping 2%. 

"In light of the events of the last few days, and the rise in Delta variant cases, optimism over the economic rebound, and possible tightening appears to have shifted markedly to concern further measures from central banks could well be needed from some central bankers to support the economy as we head towards year end," said Michael Hewson, chief analyst at CMC Markets.

It comes as European Central Bank President Christine Lagarde told investors to prepare for new guidance on monetary stimulus in 10 days, over the weekend. 

"With ECB president Christine Lagarde declaring at the weekend that the ECB would be reviewing its policy guidance at next week’s meeting on 22nd July, with the PEPP likely to see some tweaks in order to support the recovery into and through 2022," Hewson added. 

Read more: UK enjoys COVID recession wealth boom as savings rise by £200bn

Oil prices slipped after a two-day gain as investors assessed the demand outlook amid as infections rise across the world. Both benchmarks brent and crude fell 1.7% to $74.30 (£53.62) and $73.28 respectively.

The Organization of the Petroleum Exporting Countries and their allies (OPEC+) did not reach an agreement to increase output from August.

It comes after finance chiefs of the G20 large economies warned on Saturday the spread of coronavirus strains and unequal access to vaccines threaten the global economic recovery. 

Across the Atlantic, US stocks closed higher on Friday as investors await US banks earnings reports, key inflation data and Federal Reserve Chair Jerome Powell’s semi-annual appearance before Congress.

Wall Street’s blue-chip S&P 500 (^GSPC) climbed 48.71 points or just over 1%, while the Dow Jones (^DJI) ended the session 1.3% higher. Meanwhile, the tech-heavy Nasdaq (^IXIC) closed 1% up.  

It came as Federal Reserve chairman Jerome Powell reiterated on Tuesday that the recent increase in inflation will likely be temporary. Powell told the Congress that the central bank will wait for actual inflation to take root before raising interest rates.

Asian stocks rose at the start of the week as China’s central bank moved to boost liquidity. 

Shanghai Composite (000001.SS) was up just over 0.6% after the Chinese central bank cut the level of reserves commercial banks must hold, freeing up money for lending as forecasters anticipate China's economic rebound might be weakening. The Hang Seng (^HSI) rose over 0.7%, while the Nikkei (^N225) advanced 2.3% in Japan. 

Watch: What is inflation and why is it important?