European stock exchanges closed generally weaker in sluggish trade overnight in the aftermath of Spain's debt rating downgrade.
Market action was subdued in the absence of activity in London and on Wall Street, where exchanges were closed for a public holiday.
The euro dipped slightly to $US1.2282 from $US1.2335 late on Friday in London.
Bucking the downward trend was the DAX in Frankfurt, which rose 0.31 per cent to 5946.18. The CAC 40 in Paris slipped 0.21 per cent to 3507.56 points.
"There is no volume and nothing is happening," said Paris-based market analyst Xavier de Villepion of Global Equities.
"The big players are on the sidelines."
He said investors appeared reluctant to take on risk, notably as "we're talking again about sovereign debt".
Fitch ratings agency on Friday cut Spanish sovereign debt from the top AAA grade to AA-plus, warning that Spain seemed set for weak growth, largely because of an overhang of private debt.
Share prices in Mardid fell 0.7 per cent on Monday. There were declines of 0.29 per cent in Brussels and 0.15 per cent on the Swiss Market Index. The Amsterdam market edged up 0.02 per cent.
The Spanish downgrade weighed on banking shares, with French banks BNP Paribas and Societe Generale shedding 1.44 per cent and 1.41 per cent respectively.
In Madrid, Santander fell 0.89 per cent and BBVA 1.22 per cent.
Investors meanwhile digested news that business and consumer confidence in Europe fell in May after having hit a two-year high the previous month.
The Economic Sentiment Indicator produced by the European Commission dropped to 98.4 points in May across the 16 countries which share the euro currency, down from 100.6 points in April.
There was in addition a stark warning from the Italian economy minister as well as a call for a eurozone fiscal union by the head of the European Central Bank.
"Today, the risk of a new collapse faces not only the real economy but also the sovereign structure of debts and thus governments," Italian Economy Minister Giulio Tremonti told the daily Il Corriere della Sera.
Describing the global financial crisis that began in late 2008 as "the collapse of paper pyramids (which) caused the collapse of the real economy", he said the new threats were "especially serious in Europe because, the economy apart, it is affecting the very process of Europe-building.
"We are a continent, we have a market, we have a single currency, but we don't yet have a common government."
In another interview, European Central Bank president Jean-Claude Trichet called for a eurozone fiscal union to monitor public finances, saying France, Germany and Italy had set "very bad" examples.
Trichet told French daily Le Monde that supervision of fiscal policies, development of competitive economies and structural reforms in the 16-nation eurozone needed to be "radically improved".
"We are a monetary union. We now need the equivalent of a fiscal union in terms of monitoring and supervising the implementation of policies on public finances."
The ECB chief added that close mutual surveillance as foreseen in the European Union's Stability and Growth Pact "has been terribly neglected".
That, he said, was in part owing to "severe criticism, including from large countries such as Germany, France and Italy".
He said that "they set a very bad example" also in terms of managing their own fiscal policy.
The European Commission has proposed that eurozone countries submit their budgets for peer review before presenting them for approval by national parliaments, provoking resistance which Trichet said he did not understand.
"I support the commission's proposal, which I consider to be perfectly aligned with the goal of improving governance in the euro area," he said.
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