European shares fell on Monday as weak-looking business updates from companies such as media group Pearson and Norwegian seafood company Marine Harvest weighed on the market.
The pan-European STOXX 600 index was down 0.5 per cent, with the index down by around 8 per cent so far in 2016.
“We see that there is a risk that the tight cost controls could end up exacerbating the lack of growth risk. We remain sellers of Pearson,” said Gary Paulin, head of global equities at Northern Trust Capital Markets.
Marine Harvest shares also fell 4.2 per cent after the company cut its 2016 output guidance.
However, Italian bank stocks rose, although the FTSE All Italia Banks index remains down nearly 50 per cent so far in 2016 on concerns over Italian banks' bad debts.
The Italian banking sector was buoyed by merger activity, with UniCredit confirming it was in talks to sell its stake in Bank Pekao, while shareholders approved plans for a merger between Banco Popolare and Banca Popolare di Milano.
Nevertheless, equity markets were also dented by comments late on Friday from US Federal Reserve Chair Janet Yellen, whose remarks on the need for aggressive steps to rebuild the US economy boosted long-dated USbond yields.
Bond market jitters in Germany and Britain, with Britain's 10-year government bond yield rising to its highest level since the day in June when the country voted to leave the European Union, also weighed on stock markets.
British gilt yields have risen sharply over the past couple of weeks as investors anticipate a sharp bout of inflation in Britain, fuelled by the pound's nosedive to all-time lows against a basket of currencies.
Analysts said the plunge in sterling caused by concerns over a so-called “hard Brexit” - in which Britain leaves the EU's single market in order to impose controls on immigration - remained a cause of broader concern for European markets.
“I still see plenty of downside for these markets, given the fears over a hard Brexit,” said Berkeley Futures' associate director Richard Griffiths.