London: European stock markets fell on Monday and the euro struck the lowest level against the dollar for almost two years as investors worried about unrest in Hong Kong ahead of an ECB meeting.
Hong Kong shares tumbled 1.90 percent on Monday -- with banks and retailers hit hard -- following weekend clashes between pro-democracy protesters and police, while parts of the financial hub remained closed down.
Banks led the losers board in Europe, where London`s benchmark FTSE 100 index was down 0.61 percent at 6,608.78 points in afternoon trade.
Frankfurt`s DAX tumbled 1.15 percent to 9,381.46 points and the CAC 40 in Paris lost 1.14 percent to stand at 4,344.63 compared with Friday`s closing level.
In foreign exchange, the European single currency slumped to $1.2664, its lowest level since November 2012, ahead of a closely watched meeting by the European Central Bank this week.
"The theme that is now starting to dominate markets across the globe is strength in the US dollar," said Jasper Lawler at CMC Markets.
"The ongoing low inflation is the reason ECB President Draghi is pointing the eurozone`s economy towards what the Fed is coming out of, namely quantitative easing."
The euro, which later pulled back to $1.2705, from $1.2683 late in New York on Friday, is coming under pressure from concerns about weak eurozone growth.
Adding to the gloom, business and consumer confidence in the eurozone slipped again in September, official figures showed on Monday, while inflation in the region`s largest economy Germany, remained weak for the third straight month.
The dollar, however, is benefiting from US Federal Reserve plans to bring to a stop its stimulus programme in October as well as investors betting on US rate hikes occurring soon. Wall Street stocks opened sharply lower, following many international equity markets downward as a busy week of US economic reporting got underway.
Five minutes into trade, the Dow Jones Industrial Average stood at 16,944.58 points, down 0.99 percent.
The broad-based S&P 500 sank 0.92 percent to 1,964.58 points, while the tech-rich Nasdaq Composite Index fell 0.99 percent to 4,467.49 points.
"The increased (trading) volatility... looks set to continue, as European traders settle in with news of mass protests in Hong Kong destabilising Asian confidence and knocking stocks," said Alastair McCaig, market analyst at IG trading group.
"The ensuing chaos has seen (Asia-focused bank) Standard Chartered drop."
The lender was down 2.38 percent at 1,146.50 pence in London deals. Another Asia-focused lender, HSBC, shed 2.38 percent to 634.70 pence
BNP Paribas dropped 2.14 percent to 51.67 euros and Santander gave up 2.84 percent to 7.5 euros.
The ranks of Hong Kong democracy protesters who have paralysed parts of the city swelled into their tens of thousands Monday, digging in for another night of confrontation with police in their campaign for free elections.
In the worst unrest since the former British colony was handed back to China in 1997, demonstrators fought hours of running battles with police Sunday night, choking on clouds of tear gas as officers attempted to suppress the crowds.Elsewhere on Monday, shares in British infrastructure giant Balfour Beatty slumped by a fifth after the latest in a series of profit warnings this year issued by the embattled group.
The company announced in a dire trading update that its British construction arm suffered another profit shortfall of about £75 million ($122 million, 96 million euros).
Balfour Beatty`s shares collapsed 18.81 percent to 182.60 pence on London`s second-tier FTSE 250 index, which was down 0.37 percent at 15,326.31 points.
That gave the group a market capitalisation of about £1.259 billion.
The news came one month after Balfour Beatty rejected a £2.0-billion takeover offer from smaller rival Carillion.
In foreign exchange meanwhile, the euro rose against the British pound, to 78.22 pence from 78.03 on Friday. The pound slipped to $1.6241 from $1.6252.
On the London Bullion Market, the price of gold gained to $1,217.75 an ounce from $1,213.75 on Friday.
