- US government budget hangs in the balance
- Fed officials to speak
- UK and Eurozone consumer confidence improves
- Carney votes against stimulus
FTSE 100: -0.92%
CAC 40: -0.30%
FTSE MIB: -1.02%
IBEX 35: -0.63%
Stoxx 600: -0.39%
European stocks were in the red amid concerns the US government might fail to reach an agreement over the budget in time to avoid a possible shutdown.
Congress has been divided over raising the government's borrowing limit as Monday's deadline for passing the budget looms.
If the chambers do not pass a budget bill in the next week, it could lead to a government shutdown or the country defaulting.
Some economists say shutdown would cut into fourth-quarter economic growth by as much as 1.4 percentage points depending on its length.
"The haggling between US President Barack Obama and the Republicans has already started in the public arena, but in order to ensure that the US does not see its debt downgraded again Mr Obama needs to move this on and quickly," said Alastair McCaig, an analyst at IG.
"This will be the third time in less than two years that the US will have needed to take action to avoid hitting its debt ceiling; rather than once again kicking the can down the road they should tackle the underlying issues."
Also in the US, a batch of data will be released including personal consumption expenditure, personal income, personal spending and University of Michigan confidence figures.
Following the Federal Reserve's shock decision last week to keep monetary stimulus unchanged, central bank officials will speak later including Charles Evans and William Dudley.
Eurozone and UK confidence rises
Eurozone confidence rose in September more than analysts' expectations.
An index of executive and consumer sentiment increased for a fifth month to 96.9 from a revised 95.3 in August, the European Commission in Brussels revealed, beating the forecast of 96.
In the UK, consumer confidence in September jumped to highest level since 2010 as signs of economic recovery encouraged spending.
Market research group GfK's forward-looking consumer sentiment indicator rose to -10 this month compared to -13 in August. Economists were expecting a reading of -11.
In light of such positive economic indicators, Bank of England Governor Mark Carney reportedly said that he sees no reason to continue with more quantitative easing (QE).
However, he also said that if the recovery stalls then the Bank would consider the option of further bond-buying, according to the Yorkshire Post.
Steel pipe companies decline
Tenaris slid after Bank of America Corp reduced its rating on the steel-pipe maker to 'neutral' from 'buy', citing a weak market in North America and Europe.
Another steel pipe producer, Vallourec, dropped after saying it will buy the assets of Lupatech's tubular services Rio das Ostras unit for €21m.
H&M advanced after Credit Suisse Group, Cantor Fitzgerald LP and Societe Generale lifted their ratings on the European clothing retailer.
Countrywide declined following news Alchemy Partners is selling a 5.9% stake in the UK property broker.
Vestas Wind Systems rallied after the Danish turbine maker formed a venture with Mitsubishi Heavy Industries to develop offshore wind energy.
Brent crude falls
Brent crude futures declined $0.423 to $108.750 per barrel on the ICE.
The euro was up 0.13% to the 1.3506 US dollar.