Europe close: Stocks slide, pressured by Brussels-Rome spat on budget
Shares on the Continent finished near their worst levels of the session with investor sentiment dented by sharp losses in Chinese shares overnight and another round of selling in Italian government debt.
The Shanghai Stock Exchange's Composite Index fell 3.73% on Monday as Chinese investors played catch-up with global markets after a week-long holiday during which government bond yields shifted higher across the globe and with the US dollar sharply higher against the country's currency, the yuan, after the People's Bank of China cut its reserve ratio for most of the country's banks overnight.
Back in Europe meanwhile, speaking at an event in Rome next to French far-right leader, Marine Le Pen, Italian deputy prime minister, Matteo Salvini cast next year's European Union elections as a battle against what he said was budget austerity and open borders imposed by Brussels.
Earlier, Klaus Regling, the head of the European Stability Mechanism, told Bloomberg TV: "What we see is worrying [...] The fiscal targets announced by the new government that came into office a few months ago are out of line with the agreed fiscal framework that euro-area countries have given themselves unanimously."
By the end of trading, the benchmark Stoxx 600 had fallen by 1.11% or 4.19 points to 372.22, alongside a 1.36% or 164.74 point fall to 11,947.16 for the German Dax and a retreat of 2.43% or 494.49 points to 19,851.47 on the FTSE Mibtel.
In parallel, the yield on the benchmark 10-year Italian government note had climbed 14 basis points to 3.57%.
Technology was among the worst performing sectors, with the Stoxx 600's sector gauge falling 1.99% to 446.78, alongside a drop of 1.37% for Banks to 151.71.
Commenting on the negative price action in markets, Chris Beauchamp at IG said: "Friday's selloff has continued into the Monday for European markets, but with US stocks thinned out by the Columbus Day holiday the bears are finding it hard to gain traction on Wall Street. That may change tomorrow once trading resumes in earnest, but time is running out for a sell-off to really get going before Q4's usual bullish seasonality starts to make itself felt."
To take note of, the Athens's Stock Exchange's general index also came under heavy selling pressure at the start of the week, falling back 2.61% to 641.79, amid sharp drops in the shares of lenders such Piraeus Bank.
Market commentary was attributing the move lower in Greek shares to souring investor sentiment towards Italy and reports that Greece might create an asset protection scheme for the nation's banks, which in turn might negatively impact the outlook for the rating on the country's sovereign debt.
Economic news at the start of the week was slightly worse than expected.
According to Germany's Federal Office of Statistics, the country's industrial production shrank by 0.3% month-on-month in seasonally adjusted terms (consensus: 0.1%).
On a more positive note, the French central bank's industrial confidence gauge improved from a reading of 103 for August to 105 in September.