European stocks were lower on Monday, following German Chancellor Angela Merkel's win in weekend general elections as renewed policital tensions in Italy weighed on investor confidence.
During European morning trade, the EURO STOXX 50 retreated 0.31%, France’s CAC 40 eased 0.08%, while Germany’s DAX 30 slipped 0.19%.
Chancellor Merkel's conservative party won Germany’s elections on Sunday, securing her a historic third term in office. Political party leaders were due to meet later Monday to discuss coalition talks.
Separately, investors remained cautious amid political tensions in Italy after Economy Minister Fabrizio Saccomanni said he will resign if the fragile coalition government favors tax cuts over European Union deficit spending limits.
Earlier Monday, market research group Markit said that its preliminary German manufacturing purchasing managers’ index fell to a seasonally adjusted 51.3 in September from a final reading of 51.8 in August.
Analysts had expected the index to inch up to 52.2 this month.
Financial stocks were mixed, as BNP Paribas added 0.12% and Societe Generale tumbled 0.80% in France, while Germany's Deutsche Bank dipped 0.01%.
Among peripheral lenders, Spanish banks Banco Santander and BBVA slid 0.37% and 0.82% respectively, while Italy's Unicredit inched down 0.04% and Intesa Sanpaolo eased up 0.06%.
Elsewhere, Fugro NV declined 0.45% after the deepwater-oilfield surveyor named Paul Verhagen as its chief financial officer and forecast sales of EUR3.7 billion in 2016.
In London, FTSE 100 shed 0.31%, weighed by sharp losses in financial stocks.
Shares in Lloyds Banking retreated 0.72% and Barclays tumbled 1.32%, while the Royal Bank of Scotland plummeted 1.36%. HSBC Holdings overperformed on the other hand, rising 0.35%.
Mining stocks were also on the downside, as Glencore Xstrata declined 1.32% and Randgold Resources tumbled 2.16%, while Polymetal plunged 3.64%.
Adding to losses, National Grid plummeted 1.73% after UBS downgraded the operator of energy networks' shares to neutral from buy, saying the price already reflects growth projections for the company.
In the U.S., equity markets pointed to a higher open. The Dow Jones Industrial Average futures pointed to a 0.18% rise, S&P 500 futures signaled a 0.14% gain, while the Nasdaq 100 futures indicated a 0.19% increase.
Later in the day, the euro zone was to release preliminary data on manufacturing and service sector activity. Meanwhile, European Central Bank President Mario Draghi was to testify about the economy before the Committee on Economic and Monetary Affairs, in Brussels.
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