The European markets fell for the third day on Monday, as a growing list of financial companies acknowledged their exposure to the alleged $50 billion fraud surrounding Wall Street trader Bernard Madoff.
Investors were also anxious ahead of the decision of the U.S. Federal Reserve interest rate meeting on Tuesday.
In economic news, a report released by the U.S. Federal Reserve showed that industrial production fell 0.6% in November following a revised 1.5% increase in October. With the decrease, industrial production was down 5.5% compared to the same month last year. Nonetheless, the monthly decrease in production was somewhat smaller than the 0.8 percent drop anticipated by economists.
The Federal Reserve Bank of New York said in its report that the general business conditions index fell to a negative 25.8 in December from a negative 25.4 in November, with a negative reading indicating a contraction in the sector. Economists had been expecting the index to fall to a reading of negative 27.0.
Crude for January delivery rose $1.13 to $47.41 a barrel on the New York Mercantile Exchange, by the time the European markets closed. The contract hit as high as $50.05 a barrel, as reports indicated that ministers from the Organization of Petroleum Exporting Countries will call for a production cut at its meeting in Algeria on Wednesday.
The FTSEurofirst 300 of pan-European blue chips closed 0.29% lower at 827.25 points, while the narrower DJ Stoxx 50 index fell 0.56% to 2,068.19 points.
Around Europe, the U.K.'s FTSE 100 index declined 0.07% to 4,277.56, while France's CAC 40 index slipped 0.87% to 3,185.66 and Germany's DAX index fell 0.18% to 4,654.82.
BNP Paribas, France's largest bank, dropped 10.1% after a Belgian court froze the lender's plans to buy Fortis assets and the bank said it has as much as €350 million ($474 million) at risk from investments with Bernard Madoff.
HSBC, Europe's largest bank, fell 1.2% after the bank said it has $1 billion at risk after providing financing to funds that invested with Madoff.
Royal Bank of Scotland, Britain's second largest bank, slipped 3.7% after the company said it may lose as much as £400 million ($601 million) as a result of Madoff's "Ponzi scheme".
French bank Natixis fell 3.4% after the company said it has as much as €450 million of client funds invested with Madoff.
Elsewhere, Electrolux, the world's second biggest home appliances maker, slid 9.7% after the company said it won't meet its full year adjusted operating income target due to weakening demand for appliances in the last two weeks of November and in December.
Hennes & Mauritz, Europe's second largest clothing retailer, fell 2.9% after the company reported lower same-store sales for November.
On the other hand, heavily weighted oil stocks gained after crude oil prices rose. BP, Europe's biggest oil company, surged up 1.7% and Total, the third biggest, added 1.1%.
Similarly, mining stocks rose along with metals prices. BHP Billiton, the world's biggest miner, climbed 4.6%, while Anglo American, the second biggest, advanced 2.9% and Rio Tinto, the third biggest, surged up 3.6%. Copper miner Antofagasta gained 4.9%.
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