LONDON: Europe's stock markets came under pressure Monday as a Spanish election brought uncertainty and weak eurozone data weighed, while China-US trade talks came back to the fore.
Oil prices extended losses, having shed three percent on Friday after US President Donald Trump said Saudi Arabia and others in OPEC had agreed to his request for higher crude output.
The focus in Europe was firmly on Spain, which now faces weeks of coalition talks after Prime Minister Pedro Sanchez's Socialists won snap elections on Sunday without a majority, splitting the right-wing bloc but letting ultra-nationalists into parliament.
The results raise the spectre of another period of instability for Spain, with Sanchez depending on alliances with hostile rivals.
- 'Political impasse' -
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"A long-lasting political impasse can negatively affect the economy, causing companies and consumers to postpone investment decisions and wait to recruit," said Steven Trypsteen, an economist at ING.
With the country set to return to the polls on May 26 for regional, local and European Parliament elections, a new government is not likely to be formed before June.
Madrid's benchmark IBEX 35 index of major companies was the worst performer among leading European indices.
"The IBEX is underperforming the rest of the market which is not entirely unsurprising," Oanda analyst Craig Erlam told AFP.
"Obviously the prospect of higher taxes and a less market-friendly government is not ideal for stock markets."
Sentiment was also hobbled by news that economic confidence in the single currency area sank in April to hit the lowest level for more than two years.
"The need for a coalition in Spain -- and a socialist one at that, much to the disappointment of investors -- helped drag the IBEX lower," said Spreadex analyst Connor Campbell.
"Combine that with news that economic confidence in the eurozone is at a two-year low, and there was little reason for the region's indices to continue the kind of positive run that has been a fixture for most of April."
Frankfurt stocks were also lower by mid-afternoon, while Paris was flat and London managed to reclaim slightly firmer territory. All three got a small lift from Wall Street opening slightly higher, as US stocks consolidated Friday's record-breaking run.
- US-China trade talks -
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In Asia, markets traded mixed as investors struggled to track another record lead from Wall Street that was fuelled by more strong corporate earnings.
Adding to the upward momentum was data showing the world's biggest economy expanded 3.2 percent in January-March, well up from forecasts and sharply higher than the 2.2 percent seen at the end of 2018.
Hong Kong stocks rose one percent and Singapore added 1.3 percent, while Shanghai slipped 0.8 percent on concerns that Chinese authorities will wind back on recent market-boosting monetary easing measures. Tokyo is shut for holiday.
Eyes now turn to Beijing where top US negotiators will return for another round of trade talks with their Chinese counterparts, with the White House saying issues to be covered include intellectual property, forced technology transfer, agriculture and enforcement.
While the general consensus is for the two to eventually reach a deal to end their long-running trade war there are still a number of sticking points, and Trump has warned he is willing to walk away from talks of he is not happy with their progress.
- Key figures around 1330 GMT -
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Madrid - IBEX 35: DOWN 0.5 percent at 9,456.8 points
London - FTSE 100: UP 0.2 percent at 7,444.30 points
Frankfurt - DAX 30: DOWN 0.1 percent at 12,306.26
Paris - CAC 40: FLAT at 6,569.20
EURO STOXX 50: DOWN 0.2 percent at 3,493.06
New York - Dow: UP 0.1 percent at 26,560.86
Hong Kong - Hang Seng: UP 1.0 percent at 29,892.81 (close)
Shanghai - Composite: DOWN 0.8 percent at 3,062.50 (close)
Tokyo - Nikkei 225: Closed for holiday
Euro/dollar: UP at $1.1155 from $1.1151 at 2100 GMT Friday
Pound/dollar: UP at $1.2918 from $1.2916
Dollar/yen: UP at 111.81 from 111.58
Oil - Brent Crude: DOWN 19 cents at $71.44 per barrel
Oil - West Texas Intermediate: DOWN 13 cents at $63.12