European shares ended Monday lower as the oil price came off its session lows.
Oil in focus
The pan-European STOXX 600 closed down 0.3 percent. The volatility in the oil price in recent months has hit sentiment in global markets despite Brent futures having recently staged a recovery to rise above $40 per barrel. Brent futures did stage a bounce however, coming off session lows to push above $41 per barrel.
Prices were lower on Monday after a higher rig count in the U.S. put downward pressure on oil. The likes of Total were in negative territory with miners including Glencore also in the red. But the sector also pared some of its earlier losses.
Analysts said that while there has been a recent bounce in stocks, the market fundamentals remain weak.
"The dynamics that have prevailed, that have brought about their weakness still persist. I guess central banks activities is catching a bit of a bid, but really when it comes down to fundamentals and earnings quality, we just don't see it," Benjamin Gutteridge, head of fund research at Brewin Dolphin, told CNBC in a TV interview on Monday.
"And yes central banks can ignite a bit of…investment risk appetite in the short term but we can't really see that prevailing. So probably thinking about fading some of this strength, selling into it as the market shows some of this fatigue.
Telecom Italia higher
Meanwhile, Asian stock markets took a tumble Singapore's Straits Times index among the biggest losers. However, China's Shanghai Composite and Shenzhen Composite were in positive territory after state-backed China Securities Finance Corp said it would begin to offer margin financing to securities firms again after a previous suspension. Analysts said that it shows Chinese regulators are prepared to give the market easier and cheaper funding.
In corporate news, the chief executive of French insurance firm AXA, Henri de Castries, said he will step down on September 1. De Castries will be replaced by Thomas Buberl. Shares in the firm started the day sharply lower before ending higher by almost 1 percent.
Meanwhile, Telecom Italia said it is in "advanced negotiations" with chief executive Marco Patuano over his resignation, sending shares up nearly 3 percent.
Banco Popolare and Banco Popolare di Milano shares rose sharply higher after the chief executive of Banco Popolare said the two lenders are getting closer to meeting the European Central Bank's conditions for a merger.
Shares in Porsche were also in positive territory after Exane BNP Paribas lifted its price target for the stock.