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Europe markets close lower as oil price falls

European equities closed lower Monday as a fall in the price of oil once again hit investor sentiment.

Oil price falls

European Markets: FTSE, GDAXI, FCHI, IBEX

The pan-European Euro Stoxx 600 Index was lower despite opening the session in positive territory. Oil dropped more than 2 percent on Monday on the back of a stronger dollar and a rise in Libyan crude output, according to Reuters.

Energy stocks crunched 1.3 percent lower by midday on the back of the drop, with heavily-weighted majors like Total and Royal Dutch Shell showing losses of over 1 percent.

China rate cut

Mining stocks had been the best performer in the morning session as markets reacted to an interest rate cut in China on Saturday. The basic resources sector is considered to be the most exposed to the world's second-largest economy. Firms like Anglo Amercian and Rio Tinto posted modest gains on Monday and helped the FTSE 100 to push into positive territory.

However, the bounce soon faded as the session progressed. Marius Paun and Jonathan Sudaria, two dealers at brokerage Capital Spreads, said that the cut was "more a sign of weakness than as something to get the bulls geed up about."

Meanwhile in the U.S., the Nasdaq index briefly touched the psychologically important level of 5,000 on Monday as investors cheered U.S. economic data and an interest rate cut in China.

CPI data

On the data front, the flash inflation rate for the euro zone came in at -0.3 percent on a annual basis. This continued to show deflation for the month of February but was better than market expectations of a fall to -0.4 percent.

Meanwhile. a manufacturing PMI (purchasing managers' index) for the euro zone came in at 51.0 in February, unchanged from January, according to Markit. The unemployment rate fell to 11.2 percent in January for the euro zone.

In other news, thousands of Russians marched through central Moscow on Sunday in memory of Kremlin critic Boris Nemtsov who was murdered on Friday. The protesters carried banners declaring "I am not afraid" and chanting "Russia without Putin." Controversially, Russian President Vladimir Putin has taken control of the investigation into the murder.

In stocks news, French cable operator Numericable-SFR saw its shares climb to close 2.6 percent after Vivendi accepted an offer by Altice for its 20 percent stake in the firm. Vivendi shares fell over 6 percent in early deals while Altice shares surged 7 percent at the open to close 3 percent higher on the day.

- CNBC's See Kit Tang contributed to this market report.

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