Summary London's stock exchange was closed for a national holiday
PARIS (AFP) - Europe s main stock markets slumped Monday as investors still rattled by last week s turmoil ponder China s slowing economy and potential US interest rate moves.
The CAC 40 in Paris fell 1.01 percent to 4,627.82 points in mid-afternoon trading, and Frankfurt s DAX 30 lost 0.98 percent to 10,198.03 points compared with Friday s close.
London s stock exchange was closed for a national holiday.
Global equities were hammered last week as risk-averse investors dumped shares on spreading panic that the flagging Chinese economy -- the world s second largest -- could spark a new worldwide recession.
Markets took much of that back in late-week gains on encouraging US economic news.
But European stocks could end August with their worst month in four years.
Lingering concerns about China and comments over the weekend by US Federal Reserve officials left analysts Monday split over whether the US Federal Reserve would raise interest rates for the first time since 2006 next month.
In a speech at a conference on monetary policy in Jackson Hole, Wyoming, the Fed s number two Stanley Fischer said: "We should not wait until inflation is back to two percent to begin tightening."
He added, however, that the Fed needed to "consider the overall state of the US economy as well as the influence of foreign economies on the US economy as we reach our judgement on whether and how to change monetary policy."
Interpretation of Fischer s comments varied greatly.
"Despite the recent market turbulence, it would appear that an interest rate increase in September still remains on the cards. It continues to depend on the strength of incoming economic data, of which the (US) employment report at the end of this week is the most important," said Juliet Tennent, an economist with brokerage Goodbody of an official jobs report due on Friday.
But financial services company Cantor Fitzgerald in a note Insisted "a move in September is firmly off the table given recent volatility and (we) believe December at the very earliest is more likely at present."
US stocks Monday fell modestly in opening trade, after surviving last week s extreme China-driven turmoil with net gains.
Five minutes into trade, the Dow Jones Industrial Average was down 0.56 percent, while the S&P 500 lost 0.46 percent, and the Nasdaq Composite gave up 0.30 percent.
- Need a reason to panic -
The issue of the US rate rise is of importance to markets beyond what the move would say about the improving US economy.
The historically low US interest rates of recent years have fuelled investment in global stock markets because they have made it cheap to borrow money for speculation.
A rise would likely tamp down that appetite, and continue pulling investment out of slowing emerging economies and back into dollar-denominated US options yielding higher returns.
The continuing suspense over rates helped lift the euro to $1.1234 on Monday from $1.1188 late Friday.
Asian markets were mostly dragged lower Monday by Shanghai resuming last week s decline to finish down by 0.82 percent. Tokyo stocks fell 1.28 percent while Sydney lost 1.07 percent.
"Markets have opened the week on a fairly bearish note, with China seemingly at the heart of the concern again," said IG Markets chief market strategist Chris Weston, who also pointed to Fischer s comments for the jitters.
"Have markets opened on a negative footing because he caused another twist in the will they hike in September question?... It seems like we simply need a reason to panic these days."
