This is CNBC's live blog covering European markets.
European markets started the new trading week on a negative note as investors assessed the latest economic data and interest rate outlook.
The pan-European Stoxx 600 index provisionally closed 0.8% lower, with all sectors bar healthcare and utilities trading in the red. Retail led losses, down 2.1%.
Meanwhile, the U.K.'s FTSE 100 fell 0.8% to pull away from the record high it reached on Friday.
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One of the big data points last week, composite Purchasing Managers' Index for the euro zone, showed business activity in the single currency area returned to growth in January for the first time in six months, adding to hopes the bloc will avoid a recession.
The U.S. jobs report last Friday came in much stronger than expected, with nonfarm payrolls increasing by 517,000, far more than the Dow Jones estimate of 187,000 — causing investors to reassess whether the Federal Reserve will cut rates in the fourth quarter.
U.S. stocks also fell as corporate earnings continued to come in, while stocks in the Asia-Pacific were mostly lower.
European markets close lower after U.S. jobs report
Europe's Stoxx 600 index slipped 0.8% on Monday, after a red-hot U.S. jobs report caused a rethink on whether the Federal Reserve will keep rates higher for longer.
France's CAC 40 fell 1.3%, Germany's DAX fell 0.8%, and the U.K.'s FTSE 100 fell 0.8% after hitting an all-time high last week. Among sectors, retail fell 2.1% while healthcare stocks managed a 0.5% gain.
— Jenni Reid
First half of year will likely see Goldilocks conditions for a risk-on rally, strategist says
Max Ketnner, chief multi-asset strategist at HSBC, explains why the outlook is much brighter than previously forecast.
U.S. stocks open lower
The three major U.S. indexes were down as trading kicked off Monday.
The Dow lost 87 points, or 0.3%. Meanwhile, the S&P 500 and Nasdaq Composite dropped 0.4% and 0.6%, respectively.
— Alex Harring
Why Darktrace is under attack from short sellers
Cybersecurity company Darktrace has come under attack from short sellers in a blow to one of the U.K.'s most prominent technology companies.
In a report published last week, U.S. hedge fund Quintessential Capital Management accused Darktrace of engaging in "channel stuffing" and "round tripping" — activities which seek to artificially inflate a company's revenue.
"We would like to give our strongest possible warning to investors and believe that DT's equity is overvalued and liable to a major correction, or worse," QCM said in the report.
In response, Darktrace CEO Poppy Gustafsson issued a statement defending the company from what she called "unfounded inferences" made by QCM. "I stand by my team and the business I represent," she added.
Darktrace floated on the London Stock Exchange in 2021 and its debut was seen as a win for the U.K.'s aim to make its market more attractive to high-growth tech firms after Brexit. As of Monday afternoon, Darktrace shares were trading at a price of £2.32, down 37% in the last 12 months.
Here's what you need to know about Darktrace and its battle with short sellers.
— Ryan Browne
Euro zone bond yields rise as traders react to latest ECB comments
Euro zone bond yields rose Monday as traders took on board recent comments from the European Central Bank and what it means for the rate hiking cycle.
The yield on the 10-year Italian and Greek papers both rose 12 basis points, to 4.15%. The yield on the 10-year German bond, the region's benchmark paper, jumped about 8 basis points to 2.28%. Yields move inversely to prices and one basis point is equivalent to 0.01%.
The movements in bond markets came after the European Central Bank committed last week to another 50-basis-point hike in March, while also recognizing that the economic prospects of the euro area had improved.
"Price pressures remain strong, partly because high energy costs are spreading throughout the economy," ECB President Christine Lagarde said last week.
However, she added that "the risks to the outlook for economic growth have become more balanced."
The ECB's tough stance against inflation has seen rates go from negative territory in July 2022 to 2.5% last week. Investors have been wondering when the ECB might pause — or reverse — this trajectory.
"How far will the ECB raise rates? As expected, the European Central Bank did not provide a clear answer today. But it did suggest that after the preannounced rate hike of 50 basis points today and the 'intended' follow-up move by another 50 basis points on 16 March, policy makers will re-evaluate the subsequent tightening path at their meeting on 4 May," economists at Berenberg said in a note following last week's ECB meeting.
Gilles Moëc, group chief economist at AXA Investment Managers, suggested that markets might be misinterpreting the ECB in the sense that increases in interest rates will continue but likely at a slower pace.
"Christine Lagarde's slight communication downshift was in our view heralding more a mere slowdown in the pace of hikes to 25 basis points after March than a pause, and we continue to think the risk to our unchanged central scenario – that the ECB stops after hiking to 3.25% in May – is subject to an upside, rather than a downside risk," he said in an email Monday.
— Silvia Amaro
German industrial orders beat expectations for December
German industrial orders beat expectations in December and posted the biggest increase in more than a year.
New orders increased by 3.2% month-on-month, according to the federal statistics office.
The increase in orders is down to strong demand both within Germany and across the euro zone, according to the office, which is helping to stabilize the country's manufacturing sector.
A Reuters poll of analysts had forecast a 2% increase compared to November.
— Hannah Ward-Glenton
Nissan to take up to 15% stake in Renault's new electric vehicle company
Nissan will invest in an up to 15% stake in Ampere, Renault's new electric vehicle maker, according to a statement.
Renault will transfer 28.4% of Nissan shares into a French trust, according to the announcement, with Nissan and Renault retaining a 15% cross-shareholding. The deal aims to make the two carmakers more equal partners in their alliance.
Mitsubishi Motors, the junior partner in the alliance, will also consider investing in Ampere, according to the statement, with Renault planning to list Ampere in the future.
Renault shares were in negative territory at the start of trade, before bouncing to 0.4% ahead of the carmakers' press conference and settling to a 0.2% gain around 9 a.m. London time.
— Hannah Ward-Glenton
Lira falls to record low against dollar following Turkey earthquake
Turkey's currency dropped to a record low following the major earthquake that hit the country in the early hours of Monday.
The lira dropped to 18.85 in early trade before recovering some of the losses.
Turkey's stock market also tumbled, with the BIST index down 5.24% to 3,894.04 points at 8.13 a.m. London time. The index recovered some of the losses to trade down 2.5% by 9.10 am.
The earthquake had a magnitude of 7.8 and central Turkey and northwest Syria were worst affected. More than 500 people were killed in the natural disaster, and hundreds more were injured.
— Hannah Ward-Glenton
CNBC Pro: Time to buy the tech rally? Wall Street pros weigh in with their top stock picks
Investors look increasingly bullish on tech and are flocking back to the sector in droves.
But is the worst of the tech slump over? Market pros weigh in and reveal their top picks to play the sector.
Pro subscribers can read more here.
— Zavier Ong
CNBC Pro: Bearish hedge fund manager Dan Niles names his 'favorite investment' for 2023
Despite the January bounce, volatility could yet remain in the year ahead, according to hedge fund manager Dan Niles.
Amid the volatility, Niles named his favorite investment for this year.
CNBC Pro subscribers can read more here.
— Weizhen Tan
European markets: Here are the opening calls
European markets are heading for a lower open Monday as investors continue to gauge the economic outlook.
The U.K.'s FTSE 100 index is expected to open 18 points lower at 7,879, Germany's DAX 95 points lower at 15,365, France's CAC down 39 points at 7,176 and Italy's FTSE MIB down 163 points at 26,821, according to data from IG.
Tata Steel is set to report its earnings, and data releases will include euro zone retail sales in December.
— Holly Ellyatt