Europe open: Shares lower on China rate cut, hawkish ECB comment

European shares fell at the open on Monday after China cut more key interest rates and investors digested hawkish comments from a European Central Bank policymaker.

The pan-European STOXX 600 fell 0.7% in early deals with all major regional bourses lower.

Sentiment was dented when Bundesbank President Joachim Nagel told a German newspaper the European Central Bank must keep raising rates even if a recession in Germany is increasingly likely, as inflation would remain high into next year.

Investors will also be scanning the ECB's last policy meeting due this week.

China's central bank on Monday cut benchmark loan rates as it tried to boost sluggish economic activity. The one-year Loan Prime Rate, which serves as a benchmark for corporate loans, was lowered to 3.65% from 3.7%, the People's Bank of China (PBOC) said in a statement.

The five-year LPR, which is used to price mortgages, was cut to 4.3% from 4.45%. It is the second time in a week the PBOC has cut rates. The seven-day reverse repurchase rate -- a key rate at which it provides short-term liquidity to banks – was also reduced.

Reporting by Frank Prenesti at Sharecast.com