European shares edged higher on Monday, with the STOXX 600 increasing by 0.33% and France's CAC 40 gaining 0.4%, amid ongoing political uncertainty in France.

The French CAC 40 rose modestly to 7,705.85 points as investors remained cautious ahead of a critical confidence vote that could threaten Prime Minister François Bayrou's government.

Despite the gains, French stocks lagged behind broader European indices due to rising bond yields, which reflect concerns over France's high debt levels and fiscal stability.

Several notable French companies, including Danone, Pernod Ricard, and Sanofi, experienced declines between 0.4% and 1%, highlighting sector-specific pressures.

In global markets, Ryanair's shares dropped 2% after Goldman Sachs downgraded the airline, while Ahold Delhaize rose 2.2% following a Citi upgrade and news of its plans to become the largest shareholder in French AI startup Mistral AI.

Overall, market reactions included a 2% decline in Ryanair and a 0.7% rise in ASML shares, driven by corporate news and strategic investments.

Edenred's stock fell over 6% due to delays in implementing the postponed meal voucher reform, which has been repeatedly delayed amid political instability.

Investor sentiment in the euro zone weakened significantly in September, with a survey showing the Sentix index falling to -9.2 from -3.7, signaling increased market uncertainty.

France faces a pivotal week with a no-confidence vote against Prime Minister François Bayrou, which could lead to a government change amid economic challenges like high debt and potential credit rating reviews.

The country is also preparing for its first credit rating review of the year, adding to the economic and political uncertainties that are weighing on the market.

Dutch semiconductor firm ASML's shares increased by 0.7% after reports indicated it will become the largest shareholder in French AI startup Mistral AI, highlighting ongoing developments in the tech sector.

French equities have underperformed the broader European index this year, mainly due to rising bond yields and concerns over debt-fueled fiscal policies, which have dampened market sentiment.