LONDON: Europe's main stock markets wavered on Monday after weak inflation figures raised fears about the health of the eurozone ahead of a stream of key US data due this week.
London's benchmark FTSE 100 index ended down 0.20 percent at 6,743.94.
Frankfurt's DAX 30 closed up 0.18 percent to 9,833.07 points while the CAC 40 in Paris fell 0.32 percent to 4,422.84 points compared to Friday's closing levels.
"In contrast to US markets, traders in Europe continue to be much more cautious with respect to driving markets higher with disappointing economic data acting as an anchor," said Michael Hewson at CMC Markets UK.
Stocks struck a downbeat tone after official data showed inflation in the 18-nation eurozone is still stuck at the lowest levels since the financial crisis, adding to fears the bloc could slide into deflation.
The European Central Bank is so concerned that prices could start falling it has cut its interest rates into negative territory in the hope of boosting lending and pushing inflation back to the bank's target of nearly 2.0 percent.
"June's weak eurozone inflation figure will add to pressure on the ECB to provide more policy support, particularly given recent signs that the recovery may already be slowing," said Capital Economics senior economist Jennifer McKeown.
The euro gained to $1.3685 from $1.3646 late on Friday in New York. Investors also held their breath ahead of a week of holiday-shortened trading in the US that includes some major economic reports.
US pending home sales surged in May, the highest month-on-month gain in four years, according to the National Association of Realtors, although they were still down 5.2 percent on a year ago.
Chris Weston at IG Markets said investors are now looking ahead to the US payrolls report, trade balance, manufacturing and services data for guidance this week.
In mid-afternoon trading, the Dow Jones Industrial Average was flat at 16,842.65.
The broad-based S&P 500 traded sideways at 1,961.68, while the tech-rich Nasdaq Composite Index advanced 0.27 percent to 4,409.78.
"Wall Street is currently trading flat as the European markets close and with no other data released tonight, US markets could swing in positive or negative territory," added Sam Fox at Spreadex.
In foreign exchange, the British pound rose to $1.7102 from $1.7034 late on Friday after official data showed the country's recession was not as bad as previously thought.
"The UK has probably already passed its 2007 peak level of output," said Robert Wood at Berenberg. The euro eased to 80.02 British pence from 80.09 pence Friday.
Banks under pressure:
Shares in Italy's fourth-biggest lender, Banco Popolare, fell 4.8 percent to 12.03 euros after its chief executive told a newspaper the bank has cancelled the sale of its bad debt unit.
BNP closed up 0.27 percent to 49.55 euros. The French bank has agreed to pay US authorities a $8.9 billion fine to avoid being tried in court for dealing with US-blacklisted countries, sources close to the matter told AFP.
Bulgaria's central bank was also scrambling to reassure investors its beleaguered banking system was "functioning normally" after Brussels extended a credit line to stop a run on two lenders turning into a full-blown crisis.
Shares in BSkyB closed up 1.23 percent on speculation it may launch a share buyback. But Easyjet shares slumped 6.44 percent to 1,365 pence after a broker downgrade from Bank of America Merrill Lynch.
"EasyJet shares have now slid more than 20 percent from their April peaks," pointed out Hewson.
Shares in GlaxoSmithKline fell 0.60 percent after the British drugmaker confirmed the existence of a sex tape of the former boss of its China division.
Asian stock markets ended mixed on Monday as traders await the release of the June purchasing managers' indices out of China, the eurozone and the United States.
On the London Bullion Market, the price of gold fell to $1,315 an ounce from $1,317.50 on Friday.
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