The pan-European STOXX 600 fell 0.3 percent by 0930 GMT and Germany's exporter-heavy DAX dropped 0.5 percent while Britain's FTSE 100 held flat thanks to strong oil stocks.

Investors were poised for earnings to begin flowing in, with Henkel and Wienerberger among those reporting on Monday, and some said they expected stocks to react positively overall as sharp recent selloffs had sunk valuations.

"I am not too pessimistic," said Christian Stocker, lead equity strategist at UniCredit in Munich. "We saw very negative earnings revisions in Q4 and now the expectations are very, very low."

Stocker expects fourth-quarter earnings to grow 5 percent year-on-year, and sees potential in the first quarter for the EuroSTOXX 50 to rise to around 3,250 points, for the DAX around 11,500 and for the FTSE MIB to 20,200.

"As long as we have low but positive earnings growth I think we have a solid basis for the equity market," he added.

With U.S. markets closed for Martin Luther King Day, trading was likely to stay thin, but company news kept investors busy.

German chemicals firm Henkel, maker of Persil detergent and Schwarzkopf shampoo, was the biggest STOXX 600 faller, down 5 percent after announcing increased investments in new brands, marketing and digitalisation.

Shares in online classifieds firm Scout24 climbed 3.1 percent after it rejected a 4.7 billion euro ($5.4 billion)takeover offer from private equity firms Hellman & Friedman and Blackstone, potentially paving the way for a bidding war.

"We think Scout was right to reject the offer," Liberum analysts said, adding that the bid valued the firm at just more than 14 times adjusted EBITDA, below the 19 times Silver Lake paid for ZPG last year.

"We would expect other bidders to now emerge for the asset," Liberum said.

The world's largest brickmaker, Wienerberger, edged down 0.4 percent after the firm raised its dividend, saying it would reach the upper end of its 2018 earnings guidance thanks to acquisitions and cost savings.

"With Wienerberger having already raised guidance in its Capital Markets Day we believe these results were already expected by the market," wrote UBS analysts.

Elsewhere, broker notes moved some stocks: Air France  shares rose 4.2 percent after Davy Research upgraded the airline to outperform, while Fraport gained 3.1 percent after Goldman Sachs raised it to neutral from sell.

Deutsche Telekom fell 2.4 percent after Berenberg cut the stock to a "sell", and Pandora fell 2.4 percent after Citi cut it to "neutral" from "buy".