European stocks mostly dip; Germany gains confidence

Europe's major stock markets mostly fell Monday in subdued deals, but Frankfurt eked out slender gains on better-than-expected business confidence.

London's benchmark FTSE 100 index of leading blue-chip companies sagged 0.18 percent to stand at 6,432.40 points in late morning deals.

In the eurozone, the Paris CAC 40 shed 0.40 percent to 4,903.70 points compared with Friday's close.

On the upside, Frankfurt's DAX 30 rose 0.54 percent to 10,853, after news that German business confidence fell by less than expected during October.

Before the weekend, the region's markets had rallied on expectations of further economic stimulus for the eurozone, and after China slashed interest rates to counter the slowdown in the world's second-biggest economy.

"It was hardly a morning to remember this Monday, with the open's dull trading atmosphere continuing to dominate," said analyst Connor Campbell at trading firm Spreadex.

"The DAX fared better than its UK cousin this morning, lifted by a slightly better than expected, if still falling, German Ifo business climate figure."

German business confidence dipped only slightly in October, as Europe's biggest economy continues to shrug off various challenges, including the Volkswagen scandal, the leading economic think tank Ifo said Monday.

The Ifo institute's closely-watched business climate index slipped to 108.2 points in October from 108.5 points in September, Ifo said in a statement, a much shallower drop than analysts had expected.

For its survey, Ifo quizzes businesses about their current business environment and the outlook for the next six months.

The sub-index measuring current business fell to 112.6 points, its lowest level since March, but the outlook sub-index rose to 103.8 points, the institute said.

Elsewhere, Asian stock markets on Monday welcomed China's latest cut in interest rates ahead of this week's policy meeting, but analysts warned the move indicates further weakness in the world's number two economy.

While Friday's move -- the sixth reduction since November -- realised hopes for further monetary easing, Premier Li Keqiang tempered the mood by indicating China's economy could grow less than seven percent this year.

On Friday the People's Bank of China cut interest rates by 0.25 percentage points and lowered the reserve ratio requirement -- the amount of cash banks must keep in reserve.

Asian equities powered higher in early trade Monday but the gains were tempered later on, with Hong Kong and Sydney retreating.

Shanghai ended 0.50 percent higher but Hong Kong finished 0.15 percent down.

Tokyo closed up 0.65 percent, having been more than one percent higher at one point, while Seoul closed 0.38 percent stronger.

Sydney, where several firms with close business ties to China are listed, eased 0.07 percent.

In foreign exchange activity on Monday, the European single currency rose to $1.1034 from $1.1016 late on Friday in New York.

However, in earlier Asian deals on Monday, the euro had hit a new two-month low at $1.0989, as the currency was weighed down by last week's hints of new economic stimulus from the European Central Bank.