Europe shares close down as Italy drags
European shares closed lower on Monday, as political uncertainty in Italy weighed down the FTSE MIB, and investors remained unease over when U.S. Federal Reserve might start scaling back its stimulus program.
The pan-European FTSEurofirst 300 Index provisionally closed down 0.6 percent at 1,224.26 points, with investors looking ahead to events later in the week. The minutes of the latest Federal Reserve meeting, to be released on Wednesday, are likely to give an insight into when the central bank could begin to scale back it's $85 billion-a-month asset-purchasing program.
Ahead of the Fed meeting, U.S. stocks struggled for direction Monday, after major indexes posted their first back-to-back weekly losses since late June last week.
"The timing of the Fed's commencement of tapering remains in the balance," Chris Scicluna, an economist at Daiwa Capital said in a note on Monday. "Wednesday brings the minutes from the most recent FOMC [Federal Open Market Committee] meeting, which might shine a touch more light on the debate."
The FTSE MIB provisionally closed down 2.5 percent after Italian Prime Minister Enrico Letta said on Sunday that the collapse of his government would undermine economic recovery. His comments came after Silvio Berlusconi, the former prime minister who was convicted of tax fraud earlier this month, said he would bring down the government in October if he is expelled from the Senate, according to local media reports quoted by Reuters.
Elsewhere, the Bank of Spain said that bad loans held by the country's banks hit a new record in June as the economy struggles to emerge from a painful economic recession. Non-performing loans stood at 11.6 percent of all loans in June, surpassing the previous peak of 11.4 percent hit in November 2012.The IBEX closed unofficially down 2 percent on Monday.
Ahead of elections in Germany, Chancellor Angela Merkel told voters they could not trust the opposition Social Democrats, as they had a track record of breaking promises to grab power, with the help of the far-left.
(Read More: German elections are a 'close call': Merkel)
Shares of Norwegian oil and gas company Statoil closed around 0.70 percent higher after Austrian energy group OMV confirmed that it is to buy stakes in some of its oil fields. The Norwegian company also announced it has made small oil discovery in the Norwegian Sea.
(Read more: OMV buys key Statoil oil fields for $2.65 billion)
Shares of miner Glencore Xtrata close down around 2.07 percent after it announced that it could write down $7 billion when it releases its earnings this week. Mining stocks were the main lag on the FTSE 100, which provisionally closed down 0.5 percent.
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