LONDON, May 25 (Reuters) - European stock markets edged lower early on Monday, tracking losses in the U.S. market after U.S. Federal Reserve Chair Janet Yellen indicated that the central bank was poised to raise interest rates this year.
U.S. shares fell on Friday after Yellen said the economy was on course to bounce back from a sluggish first quarter and headwinds at home and abroad had started to wane. She said that delaying a policy tightening until employment and inflation hit its targets risked overheating the economy.
The benchmark French CAC 40 index was down 0.4 percent by 0720 GMT. Trading volumes in Europe were expected to be thin as several markets in countries including the United Kingdom, Germany and the United States were shut for holidays.
Spain's IBEX fell 1 percent after the ruling People's Party took a battering in regional and local elections on Sunday after voters punished Prime Minister Mariano Rajoy for four years of severe spending cuts and a string of corruption scandals.
Italy's FTSE MIB also fell 1.4 percent, with shares in Fiat Chrysler Automobiles down 2.5 percent after the New York Times reported on Saturday that the company's Chief Executive Sergio Marchionne sent an email to General Motors Co Chief Executive Officer Mary Barra in March suggesting combining the automakers, but was rebuffed. (Reporting by Atul Prakash; Editing by Sudip Kar-Gupta)