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Banks, Nestle Pull European Stocks Lower

European shares fell on Monday, led by a drop in shares of Royal Bank of Scotland, which was expected to announce a large rights issue, and Switzerland's Nestle after a disappointing update.

Banks were the largest drag on the European market, after RBS confirmed in a brief statement that it was considering a rights issue, details of which could come on Tuesday.

RBS shares fell by nearly 4 percent.

The FTSEurofirst 300 index of top European shares fell 1.2 percent to an unofficial close of 1,310.60 points. Declining shares outnumbered advancers by about three to one.

The index gained more than 3 percent last week after a flurry of positive earnings surprises on both sides of the Atlantic as the reporting season continues.

"Last week was a good week -- slightly surprising – but good, so a bit of profit-taking today is no shock," said Philip Isherwood, a European strategist at Dresdner Kleinwort.

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