Shares in Europe and Asia fell on Monday in trade thinned by holidays in a number of financial centres, hit by slumping oil prices and concerns over Chinese growth and finances - two of the year's major factors.

Prices of both Brent and US crude fell 1.8 per cent, reversing a brief rebound that helped shares in West Asia over the weekend, while Chinese stocks fell almost 3 per cent after a weak batch of industrial profits data.

While most bank dealing rooms in Europe were on skeleton staffing, and London shut, that had repercussions for a range of assets, driving the Australian and Canadian dollars down about a third of a per cent and pushing bond yields lower.

Profits at Chinese industrial companies in November fell 1.4 per cent from a year earlier, the sixth consecutive month of decline and another sign that the world's chief engine of growth for the past decade is sputtering.

"Over-capacity and declines in producer prices are hurting the Chinese government efforts and if the government cannot come up with a solution to stop this, the picture will keep on becoming more worse," retail brokerage AvaTrade chief market analyst, Naeem Aslam, said.

MSCI's broadest index of Asia-Pacific shares outside Japan gave up early modest gains to fall half a percent, putting it on track for an 11-per cent loss this year.

China's two main share indexes fell 2.6 and 2.9 per cent,respectively, with banking shares leading the fall. Hong Kong's Hang Seng dropped 1 per cent. South Korea's KOSPI fell 1.3 per cent.

Stocks affiliated with Samsung Group fell after the South Korean conglomerate said on Sunday its battery-making arm Samsung SDI will sell shares in sister firm Samsung C&T Corp to comply with regulatory requirements.

Japan's Nikkei, however, rose 0.6 per cent, with soft domestic production and retail data hinting at more pressure on the Bank of Japan to take further steps to stimulate growth.

International Brent crude traded at $37.26 a barrel, just over a cent above 11-year lows hit before Christmas.

The fall in oil prices has depressed inflation globally, in turn reducing long-term expectations for price growth that drive longer-dated bond yields. That tends to draw investors back into bond markets at the expense of stocks and pushes up the price of longer-dated government bonds.

German 10-year Bund yields, which set the standard for euro zone borrowing costs, fell 2 basis points to 0.60 per cent.

"Oil prices could be part of this but it's probably just minor trades that we're seeing here, we shouldn't read too much into it," Rabobank fixed income analyst, Bas van Geffen, said. "Most market participants have already closed their books and small...(trades) can move markets quite a lot."

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