By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- European stock markets dropped on Monday as uncertainty about whether the U.S. will launch a military strike against Syria weighed on sentiment.
The Stoxx Europe 600 index fell 0.1% to close at 305.84, breaking a three-session winning streak.
"We saw a reasonable start today on the back of some decent economic data from China and strong Japanese share prices after Tokyo was named Olympic city, but unfortunately we've moved back on the twin concerns of Syria and U.S. tapering of QE [quantitative easing]," said Richard Hunter, head of equities at Hargreaves Lansdown.
"The script hasn't particularly changed from last week and in the absence of any concrete resolutions of those two concerns, markets are likely to stay volatile," he added.
Among notable movers in the pan-European index, shares of BG Group PLC slumped 5.1% after the energy firm warned production will fall below previous expectations in 2014 due to unrest in Egypt, a production delay in Norway and lower volumes from the U.S.
Other energy firms were also on the decline, tracking oil prices lower. Shares of Total SA (TOT) fell 0.6% in Paris and Royal Dutch Shell PLC (RDSB) dropped 0.8% in London.
Investors tracked developments in the Syria conflict as U.S. President Barack Obama tried to gain support for a retaliatory strike against Syrian government targets. The calls for action come after the U.S. said it has evidence Syria's government used chemical weapons against civilians.
Obama has scheduled interviews with all major U.S. television networks for broadcast later Monday, a day ahead of his scheduled speech to the nation, in an attempt to build wider support for an intervention.
Across the Atlantic, U.S. Secretary of State John Kerry continued the White House's push to build European support, stressing the moral case for a strike at a press conference with U.K. foreign minister William Hague.
U.S. monetary policy also remained a concern for investors amid continued uncertainty about when the Federal Reserve will start tapering its $85-billion-a-month asset purchases.
After some upbeat data releases lately, investors started speculating a reduction could come as soon as the September meeting, but a lackluster jobs report last Friday raised doubts about the tapering timetable.
"September still seems to be the favorite month for tapering at the moment, but the nonfarm report did put a question mark over that. It's an element of uncertainty and now we have conflicting data from the U.S. along with the geopolitical uncertainty and that's not something investors are happy about," Hunter from Hargreaves Lansdown said.
U.S. stocks traded higher on Wall Street.
The U.K.'s FTSE 100 index slipped 0.3% to 6,530.74, while France's CAC 40 index dropped 0.2% to 4,040.33.
Germany's DAX 30 index (DX) closed marginally higher at 8,276.32. Utility firms dropped in Frankfurt after analysts at HSBC said the harsh environment for the industry in Germany is likely to persist. The bank cut the price targets on both RWE AG and E.ON SE and reiterated the underweight rating on the two firms. Additionally, Bank of America Merrill Lynch downgraded E.ON to underperform from neutral. Shares of RWE lost 1.6% and E.ON fell 1.7%.
Shares of Danone SA fell 1.6% in Paris after Exane BNP Paribas downgraded the food-products firm to neutral from outperform.
On a more upbeat note, London's mining firms posted gains after upbeat Chinese data. Trade figures over the weekend showed a pickup in exports in August, providing further evidence that the world's second-largest economy is recovering from a slowdown earlier in the year. In addition, data on Monday showed inflation remained subdued, with the consumer price index rising 2.6% year on year in August.
Shares of Glencore Xstrata PLC (GLCNF) added 0.9% and Rio Tinto PLC (RIO) picked up 1.1%.
-Sara Sjolin; 415-439-6400; AskNewswires@dowjones.com
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