European shares fell on Monday in a volatile session, as easing crude oil pared some of the gains in energy shares, while the firmer euro dented retailer and auto stocks.
Banks were the worst performing sector on the broader European market, but automotive and food and drug retailers ranked among some of the biggest drags.
The FTSEurofirst 300 index of leading European shares eased 0.1 percent, or 1.1 points, to 1,189.15 points, after earlier rising as much as 0.8 percent.
Crude oil fell below $113 a barrel, which eroded some of the gains in oil and gas shares, but added to growing relief that inflationary pressures were receding.
Crude touched record highs around $147 in July.
"The oil price is very important and is indeed part of the reason why we've seen investor sentiment look a bit stronger over the course of the last few weeks," said Henk Potts, a strategist at Barclays Stockbrokers.
"Short term it is still a pretty negative picture of slowing economic growth, which continues to be a factor," he said.
The oil and gas sector accounted for 1.1 positive points in the FTSEurofirst, compared with a positive contribution of 2.6 points earlier in the session when crude oil was heading up.
Crude Support
The FTSEurofirst 300 is on track for its first monthly rise in four months in August, helped in large part by the near-10 percent drop in crude oil that has doused concern about inflation and revived hopes of central banks cutting rates.
"Whilst people look at oil, the much bigger picture is growth differentials, fundamentals," said Philip Lawlor, chief portfolio strategist at Nomura.
"You're seeing the expectation that Europe is quite conceivably going to have lower growth than the U.S., so we're coming off a period of people readjusting, recalibrating their outlook," he said.
Oil earlier rose by as much as 1.4 percent to $115.35 a barrel and was last down 0.9 percent at $112.88.
Index heavyweight stocks Total and Royal Dutch Shell were up 1.1 to 1.8 percent, while StatoilHydro rose 3.2 percent.
The European travel and leisure index and the DJ Stoxx European retail index fell 1.5 percent and 1.2 percent, respectively.
Air France-KLM fell 2 percent, Lufthansa fell 1.6 percent, and British Airways lost 3.2 percent.
Adding to the pressure on the broader market was the euro's recovery from last week's six-month lows against the dollar, and this undermined export-sensitive stocks such as auto manufacturers.
Daimler fell 1.1 percent, Volkswagen shed 0.7 percent and French rivals Peugeot and Renault lost 1 to 1.1 percent.
Royal Bank of Scotland and Barclays which lost 1.8 to 2 percent, and BNP Paribas and Societe Generale, which fell 1 to 1.1 percent.
In the retail sector, Dutch group Ahold lost 2.6 percent, while Sainsbury fell 1.7 percent and Celesio fell 1.4 percent.
But the weaker dollar acted as a boon to base and precious metals prices and gave the mining sector a lift.
Anglo American rose 2.1 percent, Rio Tinto rose 1.7 percent, and Vedanta rose 0.9 percent.