European shares closed lower on Monday on concerns over political and economic uncertainty in Greece and Spain, despite the launch of euro zone’s permanent bailout fund, the European Stability Mechanism (ESM).
Asian macroeconomic concerns also mounted on Monday as the World Bank cut its economic forecasts for the East Asia and Pacific region, saying the slowdown in China — the world's largest consumer of raw materials — could get worse and last longer than expected.
The FTSEurofirst 300 provisionally closed down 0.9 percent at 1,101.47 points, erasing much of a 1 percent rise on Friday after better-than-expected U.S. employment data. The pan-European index has traded a tight 25 point range since September 26.
The index rose 6.6 percent in the last quarter, lifted by expectations central banks would do more to shore up the global economy, but has fallen nearly 2 percent from mid-September when it hit a 14-month high.
"We're coming into quarterly earnings season. We're coming into what is typically the most vulnerable point for equities markets," said Tavira Securities trading head Toby Campbell-Gray, who nevertheless said he would recommend buying on any weakness.
In stocks news, autos were the main losers across Europe, despite recent gains. Shares in German car maker Daimler for instance closed firmly in the red.
Lonmin shares also closed sharply lower, with the U.K. mining company in the news due to strikes and wage increases that have affected operations at its South African facility.
Engineering company Cookson was one of the day's biggest losers as it issued a profit warning due to weak trading.
The 'Bazooka' Launches
The ESM — a 500 billion euro ($649.3 billion) permanent bailout fund nick-named “the bazooka” — was launched on Monday by the euro zone’s finance ministers who are meeting in Luxembourg, putting Spain back in the spotlight as concerns grow over the country’s economic and political situation.
Elsewhere, negotiations between Greece and troika officials (from the European Central Bank, IMF and European Commission) continue in Athens over the remaining budget cuts necessary if the country is to receive its next tranche of aid worth 130 billion euros, that will keep the country afloat.