- BoE split on interest rates, minutes reveal
- Fed to release meeting minutes
- Eurozone construction output falls
FTSE 100: -0.40%
CAC 40: -0.23%
FTSE MIB: 0.11%
IBEX 35: 0.10%
Stoxx 600: -0.08%
European stocks slumped after minutes from the Bank of England's latest meeting showed policymakers were split over whether to raise interest rates.
The BoE on 7 August decided to keep interest rates unchanged at 0.5%. However, signs pointing to a pick-up in the economy have put pressure on the Bank to increase rates.
Minutes from the BoE's meeting revealed that Martin Weale and Ian McCafferty - external members of the BoE's nine-member Monetary Policy Committee (MPC) - voted to raise interest rates to 0.75%.
It marked the first time policymakers have broken ranks over interest rates in three years.
"The minutes of August's MPC meeting, revealing the first split interest rate vote since July 2011, indicate that a 2014 rate hike cannot be ruled out," said Capital Economics.
"But the low inflation outlook suggests the odds are still in favour of a delay until early next year."
The Federal Reserve will also release minutes from its July meeting, potentially offering clues on its first interest rate rise.
The Fed in July announced it would cut a further $10bn off monthly bond purchases and maintain interest rates at 0.25%. The US central bank has indicated that it sees no immediate need to lift rates, saying that the labour market still has room to grow.
The annual Fed Bank of Kansas City's economic symposium will begin on Thursday in Jackson Hole, Wyoming. Fed Chair Janet Yellen and European Central Bank President Mario Draghi will discuss their economic outlook and monetary policy on Friday.
Meanwhile, Eurozone construction output fell 2.3% in June compared to a year ago, after rising 4.4% a month earlier.
Geopolitical tensions weighed on stocks as the crises escalated in Iraq and Gaza.
Carlsberg drops after cutting forecast
Carlsberg slumped after the brewer slashed its full-year earnings forecast, blaming deteriorating conditions in its Eastern Europe unit including Russia, which contributes a large portion of its profits.
Heineken gained after reporting first-half profit that beat analysts' estimates.
Balfour Beatty retreated after the UK builder rejected an increased merger bid by Carillion.
Luxottica Group slipped after Il Sole 24 Ore reported that founder Leonardo del Vecchio may ask chief executive Andrea Guerra to step down.
Glencore was flat despite the miner posting a rise in first-half income that exceeded market forecasts and unveiling a $1bn share buyback.
The euro fell 0.32% to $1.3277.
Brent crude futures rose 0.25% to $101.82 per barrel, according to the ICE.