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Investors are eyeing the latest US jobs data with the ADP employment report due on Wednesday, followed by weekly jobless claims on Thursday, and the federal government's non-farm payrolls on Friday.
In Europe, the Stoxx 600 Index finished the day with a 0.1 percent decline from the previous close. The index dropped 8.5 percent for the month of August, according to Bloomberg.
Germany's DAX Index fell 0.4 percent, while France's CAC 40 Index shed 0.5 percent. London markets were closed for a holiday.
Investors drew heart from a report showing euro-zone inflation increased more than expected in August, as consumer prices rose an annual 0.2 percent.
Still, Fed officials and their plans for US interest rates hold the key.
"There's still no clear message from Jackson Hole and that's the message the entire market is waiting for," Guillermo Hernandez Sampere, head of trading at MPPM EK in Eppstein, Germany, told Bloomberg. "Any panic created out of this high volatility keeps investors out of the market. The fact that our English colleagues are not in the office affects activity as well."
Limiting losses was a jump in oil prices, which climbed more than 5 percent, after the Energy Information Administration downgraded its estimates for US oil output.
The EIA said it estimated US crude oil production in June 2015 at 9.3 million barrels per day, a decrease of about 100,000 barrels per day from the revised May 2015 figure. Production estimates for January through May were revised downward by 40,000 barrels per day to 130,000 barrels per day.
"With the worst of the bad news priced in following last week's capitulation trade, a very shorted oil market has traders running for cover," Chris Jarvis, analyst at Caprock Risk Management in Frederick, Maryland, told Reuters. "We continue to believe the pressures that have created this downdraft for oil prices are beginning to deflate and subside. Aggressive short traders are now paying the price."
In its monthly magazine, OPEC renewed its willingness to talks working toward a 'fair' price for oil, though the group made it clear that non-OPEC producers would need to lower output too.