European stocks have inched lower in early trade, halting their sharp rally started in late July, although the losses were limited by growing expectation of bold action from the European Central Bank to lower the borrowing costs of Spain and Italy.
The FTSEurofirst 300 index of top European shares was down 0.06 percent at 1,109.69 points, taking a breather after hitting a 13-month high on Friday.
Basic resources stocks led sectoral fallers in early deals, down 0.7 per cent, weighed by weaker base metals prices. Eurozone banks, meanwhile, were up 0.5 per cent.
A German magazine reported over the weekend that the ECB is considering setting interest rate thresholds for purchases of struggling eurozone country's bonds, a move that would discourage speculators from pushing yields above the level set by the eurozone's central bank.
"The prospect of the ECB stepping in is removing most of the systemic risks, so stock pickers are back," a Paris-based equity and ETF sales trader said.
"But that said, the gains over the past few weeks are substantial, and we could go sideways until the ECB finally announces its plan."
Britain's FTSE 100 was flat at 5,852.53, hovering close to a four-month closing high of 5,864.78 points hit last week on the back of expectations eurozone leaders were inching closer to concerted action to stem the region's crisis.
Mining stocks were among the top fallers, tracking a decline in the price copper, which was hit by profit-takers after a sharp rise in the previous two sessions.