European stocks extended losses Monday, as traders worried inflation might kick in faster-than-expected.
The pan-European Stoxx 600 closed the Monday session provisionally lower by 1.5 percent with every sector trading in negative territory.
Global markets fell across the board after the Dow Jones industrial average tumbled 665.75 points to close down at 25,520.96 on Friday, capping off the index's sixth-largest points decline ever. On Monday, early trade pointed to another day of losses on Wall Street.
Data released Friday showed a higher number of U.S. jobs compared to analysts' expectations and a 2.9 percent increase on an annualized basis in wages. As a result, traders started wondering whether inflation could suddenly grow at a faster pace than their predictions as well as interest rates, which would mean higher costs for companies.
Financial services stocks were some of the most affected sector by the global sentiment and fell 2 percent on the day.
Looking across the European benchmark, there were only a few stocks moving up on Monday, with Capita at the top of the index up by 6.5 percent. The shares of the British company were recovering some gains after the stock plunged to a 20-year low last week following a profit warning.
Vodafone found itself under pressure. This on concerns that the telecom firm will need to raise money if it wants to buy assets from U.S. cable company Liberty Global. Shares ended Monday more than 4 percent lower.
U.K.-listed firm Homebase has warned it will close some stores after a sharp fall in trading. The Australian retailer Wesfarmers bought Homebase in 2016 and is rebranding the company as Bunnings. It looked like good news for main rival B&Q, who saw shares in parent firm Kingfisher rise 2.26 percent on the day.
It was a bumpy session for Apple supplier IQE, which is based in Cardiff, Wales. The stock in the company fell 11 percent in value after its accounting practices were called into question. The recovery to finish the day just 2.3 percent lower came after the firm, and analysts at Barclays, rejected the claims.
"For the time being, there's a lot of uncertainty now on the back obviously of the labor report on Friday because in a way what we are seeing now is that finally, the market is waking up to potentially higher inflation," Sonja Laud, head of equity at Fidelity International, told CNBC Monday.
According to Laud, one should watch inflation developments "quite carefully" but not worry too much about the ongoing sell-off.
"For the time being, I wouldn't read too much into it because let's face it, the correction that we are seeing so far is not even in line with the medium correction we've seen since the 1980s, which is greater than 10 percent," she said.
Earnings, new data and politics were also affecting sentiment in European trading.
In earnings news Monday, Ryanair posted a 12 percent increase in profits during the last quarter, but the stock closed down by more than 2 percent. The airline said that it would face down what it described as "laughable demands" by pilots for conditions traditionally offered by high-cost rivals, Reuters reported.
On the data front, Spanish services purchasing managers index (PMI) hit 56.9 in January, registering its fastest expansion in the six months to January.
Investors will turn attention to the latest news surrounding Brexit, as a new round of talks between the U.K. and European Union (EU) kicks off Tuesday. British Home Secretary Amber Rudd told the BBC on Sunday that the U.K. government wouldn't "surrender too quickly" in its battle for a bespoke trade deal with the EU.