European shares fell on Monday as top Federal Reserve officials bolstered expectations for a US rate hike this year, while Alstom bucked the weaker trend after a contract win.
The pan-European STOXX 600 index fell 0.3 per cent, giving back gains seen in the previous session, while a holiday closure of UK markets was expected to keep activity low.
At the Fed's annual gathering for global central bankers on Friday, Fed Chair Janet Yellen said the case for a rate hike had strengthened, but while she gave no hints of timing, Fed Vice Chair Stanley Fischer said later her speech was consistent with expectations for possible rate increases this year.
Investors said Friday's US jobs report was now in strong focus for any more clue about whether the next US rate hike could come as early as September. Futures price in a 33 per cent chance of a September hike, up from 18 per cent last week.
“The US non-farm payrolls report should deliver the final indicator for the market as to whether it has correctly priced in the probability of a September rate hike,” analysts at BayernLB said in a note.
Europe's STOXX 600 Oil & Gas index fell 0.6 per cent, one of the biggest sectoral decliners, weighed down by falls in crude oil prices. Shares in oil majors Total and Eni fell 0.8 and 1.2 per cent, respectively.
No sector was trading in positive territory.
Stada fell 1.8 per cent, making it one of the biggest losers on the STOXX. Over the weekend, activist investor Active Ownership Capital succeeded in convincing shareholders of Stada to remove the company's supervisory board chairman in a voting marathon, but failed to install its own candidate.
Among gainers, Alstom rose 3.3 percent after the French transport group signed a 1.8 billion euro ($2 billion) deal to design and build 28 new high-speed trains for US rail operator Amtrak.
UniCredit added 0.2 per cent, after the Financial Times reported on Sunday that Poland's PZU was confident about reaching a deal to acquire Pekao by the end of October.