This week will see another clutch of euro zone events. Spain, under pressure to submit to a rescue programme, will present its 2013 budget on Thursday, while Greece is also due to resume talks with the EU/IMF/ECB troika of lenders.

The FTSEurofirst 300, which failed to build on strong recent gains last week, opened 0.3 percent lower as trading resumed across the region after Asian stocks traded 0.4 percent lower.

London's FTSE 100, Paris's CAC-40 and Frankfurt's DAX were between 0.3 and 0.7 percent lower as most major indexes started the new week in negative territory.

  The sideways market is set to continue "most likely until we get more information from the Spanish issue," Ishaq Siddiqi, a strategist at ETX Capital, said, citing structural reforms expected out of Madrid on Thursday.

 "The liquidity rally looks like it's over and global growth worries are back on the agenda. It's a very light day on the whole so it's difficult to say today is going to be the day we see a change in price action."

The euro was down 0.1 percent at 1.2962 by 0715 GMT as it tested last week's low against the dollar, while the growth-linked Aussie dollar slid as its rally sparked by recent central bank stimulus moves ran out of steam.

With Madrid making slow progress towards an expected international bailout, Spanish government bond yields rose 6 basis points to 5.85 percent. Demand for German government bonds crept up with German bund futures up 8 ticks at 140.08.