European shares ended a choppy session in negative territory on Monday, with drugmaker Shire falling sharply after announcing it would buy Baxalta and commodity shares tracking oil and metals prices lower. Shire fell 8.2 percent on nervousness over the price offered for Baxalta. The London-listed group, which first approached the US firm with an all-stock offer in July, won over the maker of treatments for rare blood conditions, cancers and immune system disorders after adding a cash sweetener.
The pan-European FTSEurofirst 300 index ended 0.4 percent lower at 1,335.11 points after rising up to 1,353.71 earlier in the day. It slumped 7 percent last week. The market also came under pressure after commodity stocks fell following a sharp drop in copper prices to a 6-1/2-year low and as crude oil traded near a 12-year trough on concerns about demand in China.
"Another drop in the value of Chinese shares coupled with volatile oil prices are keeping markets on edge," Jasper Lawler, analyst at CMC Markets, said. "Investors are stepping back to reassess whether last week's declines are justified." China allowed its yuan currency to strengthen for a second straight session on Monday in a move that could calm concerns over Beijing's readiness to let the currency depreciate.
The development added to doubts over Beijing's ultimate policy intent, however. It failed to stop investors selling Chinese shares, though some saw the move as a signal that China would work hard to support the world's second-biggest economy. Shares in Italy's third-largest lender Banca Monte dei Paschi di Siena touched a record low after falling 11 percent.
However, some European carmakers gained. Volkswagen rose 1.7 percent on news of plans to show US regulators that it can fix some of the diesel emissions problems that have beset the German company. Some strategists remained cautious on the near-term outlook for equities, saying the Chinese slowdown remained of concern and investors should look for opportunities to take profits. "Clearly, equities are unlikely to keep falling in a straight line, with periodic rebounds likely. However, we believe that one should be using any bounces as selling opportunities," said J.P. Morgan global equity strategist Mislav Matejka.