European stocks turn negative, Italy’s banking woes weigh

The European stocks opened Monday on a mixed note, with the energy and resource stocks lifted amid persistent rally in oil prices, in wake of the global oil output cut deal reached during the weekend.

However, the sentiment quickly soured as the uncertainty around the rescue plan for world’s oldest bank, Monte dei Paschi, weighed heavily on the investors’ sentiment. On Friday, the ECB rejected bailout extension for Paschi, after the bank failed the Europe-wide stress tests over the summer.

Moreover, the retreat in the European equities from eleven-months peaks can be also attributed to increased cautiousness in the markets, as focus turns towards the FOMC meeting starting tomorrow, with the final verdict on the US interest rates due out on Wednesday. According to the CME FedWatch tool, markets are currently pricing in a 94.9% chance of a rate hike.

Meanwhile, Germany's DAX 30 index drops -0.26% to 11,175 levels, while the UK's FTSE 100 index trades -0.25% lower at 6,940. Among the other indices, the French CAC 40 index trades muted around 4,765 while the pan-European Euro Stoxx 50 index trades modestly flat at 3,200 points.