[LONDON] European stocks fell on Monday while Turkish shares plunged on the political and economic uncertainty triggered by the country's elections, offsetting support for the drinks and banking sectors.
Markets were also tracking the latest developments surrounding Greece's standoff with the European Union in debt talks, as well as comments out of the Group of Seven summit in Germany.
The CAC 40 in Paris lost 1.28 per cent to 4,857.66 points, and Frankfurt's DAX 30 dropped 1.18 per cent to 11,064.92 points.
London's benchmark FTSE 100 slid 0.21 per cent to 6,790.04 points compared with Friday's close.
The euro rose to US$1.1214 from US$1.1115 late on Friday in New York. Profit taking set in after the dollar had rallied ahead of the weekend following robust US jobs data that increased the prospect of an interest rate rise from the Federal Reserve later this year.
"European markets have continued where they left off at the end of last week, as rising bond yields and the continued impasse over a new Greece deal keep investors cautious," said Michael Hewson, chief market analyst at CMC Markets UK.
Elsewhere, the Turkish lira plunged to a record low against the dollar Monday, breaking through the 2.8 lira level against the dollar for the first time.
Turkey's central bank acted swiftly to give some support to the pressured Turkish lira, saying it was pruning its short-term foreign exchange deposit rates effective Tuesday.
Turkey's main stocks index tumbled by over 8.0 per cent at the start of trading, but by the end of trading the BIST 100 index in Istanbul climbed back to a loss of 5.1 per cent for the day.
Turkey's Islamic-rooted ruling AKP party on Monday weighed its future strategy after losing its absolute majority in parliament for the first time since winning power 13 years ago, in a stunning setback for President Recep Tayyip Erdogan.
Greece meanwhile continued to be a central focus for markets. Athens desperately needs to secure the release of 7.2 billion euros (S$10.8 billion) in aid from its IMF and EU creditors in order to meet debt servicing payments totalling 1.6 billion euros by the end of June.
"There's not much time left. We have to work very hard on this," said German Chancellor Angela Merkel at the close of the G7 leaders summit.
And US President Barack Obama weighed in as well, telling Greek leaders they will "...have to follow through and make some tough political choices that will be good for the long term." After a weekend spat between Athens and the EU over planned reforms, Greek Finance Minister Yanis Varoufakis told reporters on a visit Monday to Berlin: "It is time to stop pointing fingers at one another and it is time that we do our job... to come to an agreement." Wall Street stocks were lower in midday trading on lingering worries about a potential Greek default as investors also anticipated Apple's launch of a ramped-up music service.
The Dow Jones Industrial Average was down 0.17 per cent at 17,818.33 points.
The broad-based S&P 500 shed 0.31 per cent to 2,086.30, while the tech-rich Nasdaq Composite Index lost 0.44 per cent to 5,046.33.
On the corporate front, shares in drinks giant Diageo jumped 6.79 per cent to 1,880 pence in London afternoon trade on reports of a potential Brazilian takeover bid for the maker of Guinness stout and Foster's lager.
Brazilian newsweekly Veja reported that the nation's richest man, billionaire Jorge Paulo Lemann, and his partners in private equity firm 3G Capital were considering a bid for Diageo.
A Diageo spokesman declined to comment on the matter.
The banking sector was also in focus, with shares in Deutsche Bank surging 3.57 per cent to 28.60 euros in Frankfurt, the day after its co-chief executives announced they were resigning as the banking group faces a wave of scandals and missed profit targets.
Germany's largest lender is mired in around 6,000 different litigation cases and was last month fined a record US$2.5 billion for its involvement in the Libor interest rate-rigging scandal.