Europe's STOXX 600 falls ahead of data-intensive week

European shares started the week on a tepid note, led by weakness in miners amid a data-heavy week, while investors awaited speeches from European Central Bank (ECB) officials for clues on the central bank's policy trajectory this week.

The pan-European STOXX 600 index was down 0.4 per cent, off its record highs last week, after inflation in the euro zone fell to 2.2 per cent in August, its slowest pace since July 2021.

All major European markets, including those in Germany, Spain and Italy, were also down around 0.4 per cent.

"Everyone is taking a breather after a pretty hectic August in terms of market price action at least and really looking for signals on the macro side that the soft landing scenarios are in place and that central banks can begin to lower rates," said Richard Flax, chief investment officer of Moneyfarm.

ECB policymakers are increasingly at odds on the outlook for growth, a rift that could shape the rate cut debate for months, with some fearing a recession and others focusing on lingering inflation pressures, sources close to the debate said.

Money markets have almost fully priced in a 25 basis-point rate cut by the ECB on Sept. 12, with total easing of around 60 bps by the end of 2024, according to LSEG's interest rate probabilities.

Consumer discretionary sectors, including automobiles and retail weighed on the markets with a nearly 1 per cent decline.

Miners were down 0.8 per cent after most base metals began September on a weaker note as the market trimmed bets for aggressive policy easing in the US and China's manufacturing data heightened demand concerns.

Among individual movers, Rightmove jumped 21 per cent after REA Group, the property listings company majority-owned by News Corp NWSA.O, said it was considering buying the British firm.

German peer Scout24 also advanced 3.3 per cent.

Sanofi's shares rose 2.8 per cent in spite of the company missing the main goal of two late-stage trials to treat relapsing forms of multiple sclerosis (MS).

A survey showed that the downturn in Germany's manufacturing sector continued to gather pace in August, with the HCOB final Purchasing Managers' Index (PMI) for German manufacturing falling to 42.4 in August from 43.2 in July.

For the region, manufacturing activity remained mired in contraction in August, with the data suggesting a recovery could be some way off as demand fell at its sharpest pace this year.

As markets closely eye more economic data from the region and a slew of speeches from ECB officials, the week will culminate in the US payrolls data on Friday, which could recalibrate investors' interest rate expectations.