European equities ended at their lowest in nearly a week on Monday, with an early sell-off in U.S. shares on concerns over demand for Apple's iPhone 5 prompting some investors to take profits on recent strong stock gains in Europe.
"European equities lost their early luster, impacted by the Wall Street and offsetting some low level M&A activity in Europe," Jeremy Batstone-Carr, head of private client research at Charles Stanley, said.
"It appears that the 'risk on', 'buy cyclicals and financials' rally is running its course now. Instead, with the valuation gap narrowing, it's time to look at quality again."
The pan-European FTSEurofirst 300 Index fell for a third straight session to provisionally close 0.3 percent lower at 1,160.42 points, while the euro zone's blue chip Euro STOXX 50 index was down 0.1 percent at 2,716.5, with its relative strength index at 68, suggesting near-overbought conditions.
Italy's FTSE MIB index fell 0.6 percent on uncertain political situation in the debt-stricken country. There are concerns that a win by Pier Luigi Bersani's coalition in February's general election could see the undoing of many of the tough economic reforms that the current technocratic prime minister Mario Monti has introduced.Polls show that Bersani's center-left coalition is still widely ahead of Silvio Berlusconi's center-right coalition.
Earlier on Monday, data released showed euro zone factory output fell for a third straight month, decreasing by 0.3 percent month-on-month. Analysts said the figures showed the decline is moderating.