Europe close: China weakness in focus ahead of raft of key risk events

Stocks started the week on a down note ahead of an extraordinarily busy calendar in global capital markets for over the next few days, including a second round of trade talks between the US and China, quarterly earnings updates from a slew of American technology giants and a potentially key week on the Brexit front.

"Such a busy week will be a key test of the resilience of the risk appetite seen over the past month. Has this been one of the shortest bear markets in history, or merely a pause before a new one gets underway?," said IG's Chris Beauchamp.

By the end of trading, the benchmark Stoxx 600 was down by 0.97% or 3.46 points at 354.38, alongside a fall of 0.63% or 71.8 points to 11,210.31 for the German Dax and a drop of 1.02% or 202.39 points to 19,608.13 on the FTSE Mibtel.

Basic Resources shares outperformed throughout much of the session, after a dam belonging to Brazilian miner Vale broke at the weekend, pushing iron ore futures 6% higher in early trading.

But at the closing bell, the Stoxx 600 sector gauge was down by 0.53% to 429.32. That came alongside a 1.50% fall to 421.67 in a sub-index of Technology issues after US chip-maker, Nvidia, warned it would miss analysts' estimates for sales in its fiscal fourth quarter due to "deteriorating macroeconomic conditions" including in China.

US construction equipment maker Caterpillar side-swiped markets with a profit-warning on Monday too, with weakness in China also a focal point.

Strategists at Bank of America-Merrill Lynch were more cautious. In a research note entitled "take cover", they told clients that a US-China deal and a 'dovish' Fed were already "consensus" or priced into stocks, with only improved data out of China left to drive further upside, but that they said was a story for the second quarter.

In the meantime, "markets may correct", BofA-ML said.

Against that backdrop, and underscoring one of the points made by Merrill, overnight China's National Bureau of Statistics had reported a 1.9% decline in industrial profits in the Asian giant for the month of December.

But investor angst during the first part of the session was at least partly offset by news at the weekend of a temporary resolution of the US federal government shutdown.

Meanwhile, front month Brent crude oil futures fell 3.25% to $59.70 a barrel on the ICE, as data published last Friday revealed an unexpected rise - the first increase of 2019 - in the number of onshore oil rigs operating in the States.

In other economic news, the European Central Bank reported that the annual rate of growth in euro area money supply increased from 3.7% for November to 4.1% in December (consensus: 3.8%).

Nevertheless, the dip in the annual rate of growth of M1, or so-called 'narrow' money supply, meant the "overall message" from Monday's report was that economic growth in the Eurozone was slowing, said Pantheon Macroeconomics's Claus Vistesen.

For later in the day, ECB chief, Mario Draghi, was set to speak before the European parliament, at 1400 GMT.

On the corporate front, according to Bloomberg, Deutsche Bank clinched a commitment for new investment from Qatar, likely via the country's sovereign wealth fund.

Shares of Siemens ended the session little-changed and off their intra-day lows, despite reports that Brussels was set to shoot down its merger with Alstom after judging that the concessions made by the two companies fell short of what was needed.