Europe close: Stocks end lower ahead of Fed meeting

European stocks finished at their lowest level of the session despite a late bounce in oil prices and better-than-expected Chinese data out over the weekend.

The benchmark DJ Stoxx 600 closed 1.76% lower at 349.54 points while the Dax-30 had surrendered 1.32% by the close.

Stocks had started the session with solid gains, bouncing back from last week’s losses as investors digested an encouraging reading on Chinese industrial production, but the buoyant mood proved to be short-lived.

Figures released by China´s National Bureau of Statistics on Saturday showed industrial output grew more than expected in November, suggesting Beijing’s efforts to boost the economy may be filtering through.

Industrial production was up 6.2% from a year earlier, beating expectations of a 5.7% increase.

Oil prices continued to slide after Iran´s deputy minister for international and commerce affairs told Bloomberg there was "absolutely no chance" the country would delay increasing its shipments.

West Texas Intermediate crude futures for January delivery hit an intra-day session low at $34.53 a barrel on NYNEX, falling below $35 for the first time since 2009, but by the close of trading were bounicng back by 2.33% to hit $36.45 a barrel.

The week was set to be a crucial one, with the US Fed looking set to raise interest rates for the first time in almost a decade.

“All signs point to a first move in the Fed’s target rate since November 2008,” said Societe Generale.

“Efforts will be placed on communication this time around, as the Fed will need to carefully harmonize market expectations with their own forecasts. As we saw with the ECB, it is easy to disappoint, so communication will have to play a key role. Nonetheless, we expect Yellen to strike the right balance.”

On the corporate front, Old Mutual and Investec surged as the rand gained ground following the appointment of a third finance minister in South Africa.

The shares fell sharply last week after finance minister Nhlanhla Nene was sacked, pushing the rand to record lows.

Pharmaceuticals giant AstraZeneca was slipped after confirming that it is exploring potential strategic options with biotech company Acerta Pharma BV.

Vestas Wind edged higher following the weekend’s climate deal.

Shares in BG Group and Shell slipped after the merger between the companies received unconditional clearance from the Chinese Ministry of Commerce.

On the data front, industrial production in the Eurozone rose 0.6% in October from the previous month, according to figures released by Eurostat.

The figure surpassed economists’ expectations of a 0.3% rise, while industrial production on the year rose 1.9%, also beating estimates.

“A strong start to the fourth quarter for manufacturing in the euro area,” said Pantheon Macroeconomics.

“Assuming no further change over the quarter, production will rise 0.2% quarter-on-quarter in Q4, up slightly from 0.1% in the third quarter. This estimate is very uncertain at this point in the quarter, but looks reasonable based on leading indicators.”