The Stoxx Europe 600 on Friday had risen 0.6% to close at its highest level since late 2007 on upbeat eurozone growth data for the fourth quarter of last year.
On Monday, however, the index softened as investors avoided placing major bets before a high-stakes meeting of eurozone finance ministers in Brussels later in the day as they search for an agreement over Greece's finances.
Any changes to the content or expiration date of Greece's existing EUR240 billion ($273 billion) bailout have to be decided by Friday, to give national parliaments in the likes of Germany, Finland and the Netherlands enough time to approve them before the end of the month.
Without such a deal, Greece will be on its own on March 1, cut loose from the rescue loans from the eurozone and the International Monetary Fund that have sustained it for almost five years.
"The new Greek government is running out of time to reach an agreement with its international creditors," said Lee Hardman, currency economist at Bank of Tokyo-Mitsubishi, adding that euro volatility is likely to increase if an agreement isn't reached.
The euro added 0.2% in early trade against the dollar but has already tumbled close to 6% against the buck so far in 2015, largely driven by diverging monetary policy in Europe and the U.S. One euro currently buys $1.1421.
Credit strategist Job Veenendaal at ING said that although "officials on both sides of the fence signaled some willingness to compromise on Friday" they have since "progressed only little."
Rates strategists at Rabobank echoed this, saying that confidence about an imminent end to the standoff had risen last week "as both sides indicated there was room for compromise." They add, though, that Greek Finance Minister Yanis Varoufakis "continues to signal there is little appetite for [the Greek] government to accept conditions that wouldn't ease the burden of austerity."
Germany's DAX 30, which ended Friday at an all-time high, lost 0.3% while France's CAC 40 edged 0.1% lower. In Greece, Athens's main stock index, which has lost close to 20% over the past six months and 30% over the past year, was 0.1% lower.
Beyond Greece, European corporate earnings remained in focus Monday. Shares in international energy-services group Hunting PLC tumbled to the bottom of the Stoxx Europe 600 after the company said that the recent oil-price slump will hurt profitability, prompting it to cut its workforce and reduce all nonessential costs.
So far, however, the European earnings season has largely featured positive surprises. According to Thomson Reuters' data, 59% of companies have met or beat earnings forecasts with their results so far this season.
In commodity markets, Brent crude declined 0.8% to $61.05 per barrel. Gold added 0.6% to $1,234.1 a troy ounce.
Write to Josie Cox at josie.cox@wsj.com
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(END) Dow Jones Newswires
February 16, 2015 04:30 ET (09:30 GMT)
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