European shares ended lower for a fourth straight session on Monday, with mounting uncertainties related to a looming U.S. fiscal crisis and the next tranche of aid for Greece hurting investor sentiment.
Analysts said if the euro zone's blue-chip Euro STOXX 50 index failed to recover in the coming days and fell around another 1.5 percent to 2,440 points, then 'stop-loss' sell orders could be triggered and lead to further declines.
The index fell 0.2 percent to 2,474.96 points, while the pan-European FTSEurofirst 300 provisionally ended 0.2 percent lower at 1,095.44 points on concerns about the U.S. "fiscal cliff" of scheduled spending cuts and tax rises from next year, and the Greek situation.
"The 'fiscal cliff' is really a burden for the market. Most probably the lawmakers will come to an agreement early next year, but that's the problem, as this uncertainty will continue until then. Greece is also a big issue for the market," said Christian Stocker, equity strategist at UniCredit in Munich.
Among the sectors worst hit were those more exposed to any weakening in the macroeconomic outlook, including construction and materials, down 0.9 percent.
Losses were offset however by strong trade data from China which suggested growth in the world's second-largest economy may be speeding up.
In corporate news, shares of Spain's Banco Popular closed sharply higher after the lender secured 2.5 billion euros in additional capital through a successful rights issue, avoiding the need for state aid.
Shares in Italy's biggest telecom group Telecom Italia also jumped after the company confirmed Egyptian businessman Naguib Sawiris was interested in buying a stake in the company by acquiring newly issued shares. According to press reports, Sawiris could invest up to 5 billion euros ($6.4 billion) in the heavily indebted company.