World stock markets were mostly lower Monday on investor disappointment over the fading prospects of substantial cuts in US interest rates following better-than-expected jobs data last week, traders said.
Taking their cue from an earlier sell-off in Asia, European stock markets weakened as steep reductions in US borrowing costs appeared to be off the cards, at least for now.
Among the leading European indices, the blue-chip CAC 40 in Paris, the DAX 30 in Frankfurt and London's FTSE all ended the day in the red.
On the other side of the Atlantic, Wall Street opened down by about 0.3 percent and headed lower in midday trading.
"Global equities are quietly softer across the board on softer-than-expected German data, follow-through on Friday's falling Fed rate cut blues, and a plethora of regional stories that added to the risk-off tone," said OANDA analyst Edward Moya.
"Deutsche Bank's mixed review on their radical overhaul, (Turkish President) Erdogan's sacking of his central bank chief, uncertainty on how quickly Iran will raise their nuclear enrichment programme, and Morgan Stanley's downgrade of investment guidance on global stocks are keeping markets in the red," Moya said.
While the dollar was steady against its main rivals, it surged against the Turkish lira after President Recep Tayyip Erdogan sacked the head of the country's central bank following months of tensions over high borrowing costs.
Erdogan, who is battling to boost Turkey's struggling economy, has repeatedly railed against high interest rates and called for them to be lowered to stimulate growth.
"The Turkish lira is sliding once again amid renewed concerns that Erdogan is ruining the nation's economy, just as inflation was starting to ease back," said Forex.com analyst, Fawad Nazagzada.
"His decision to replace the Turkish central bank governor over the weekend has backfired with the lira taking a tumble. Undoubtedly, some investors are concerned that monetary policy will now be loosened prematurely, and this could prevent a convincing drop in inflation."
The US jobs data on Friday suggested the world's top economy is in better shape than anticipated and would not need substantial rate cuts to be kick-started.
Investors had been hoping that the Fed would cut US borrowing costs by as much as half a percentage point at its next policy meeting later this month, but such a likelihood now appears to be fading.
Traders said investors' focus would now switch to the congressional testimony of Fed chief Jerome Powell this week, with investors hoping he will provide some guidance on the bank's plans.
Also up this week will be the release of minutes from the Fed's June meeting, while US and Chinese officials are working to schedule top-level trade talks.
- Key figures around 1540 GMT -
London - FTSE 100: DOWN 0.1 percent at 7,549.27 points (close)
Paris - CAC 40: DOWN 0.1 percent at 5,589.19 (close)
Frankfurt - DAX 30: DOWN 0.2 percent at 12,543.51 (close)
EURO STOXX 50: DOWN 0.1 percent at 3,523.76
New York - Dow: DOWN 0.5 percent at 26,779.95
Tokyo - Nikkei 225: DOWN 1.0 percent at 21,534.35 (close)
Hong Kong - Hang Seng: DOWN 1.5 percent at 28,331.69 (close)
Shanghai - Composite: DOWN 2.6 percent at 2,933.36 (close)
Euro/dollar: DOWN at $1.1212 from $1.1227 at 2030 GMT Friday
Dollar/yen: UP at 108.70 yen from 108.50 yen
Pound/dollar: DOWN at $1.2507 from $1.2525
Brent North Sea crude: UP 39 cents at $64.62 per barrel
West Texas Intermediate: UP 51 cents at $58.02 per barrel