Volkswacht Bodensee - European stocks fall back after rallying on US rate hopes

Fed chief Jerome Powell told central bankers at their annual conference in Wyoming last Friday that "the balance of risks appears to be shifting" toward signs of weakness in the world's largest economy.

Investors interpreted that as a sure signal of a rate cut at the Fed's meeting next month, as inflation has not shown signs of soaring in the wake of President Donald Trump's tariffs blitz.

"Powell basically delivered the 25 basis points before the September meeting," said Ipek Ozkardeskaya, an analyst at Swissquote Bank.

Wall Street soared on the news ahead of the weekend, while the dollar fell since lower interest rates make the greenback less appealing to foreign investors.

All eyes now turn toward a US GDP report on Thursday and a key inflation gauge coming on Friday for clues on how far rates might fall -- or not -- in the coming months.

"The data -- especially the inflation data -- will tell if there could be further rate relief into the year-end," Ozkardeskaya said.

Asian markets benefited from the rally, with Tokyo rising almost half a percent while Hong Kong finished up 1.9 percent, boosted by a surge in Chinese tech giant Alibaba.

European indices were broadly lower though London was closed for a public holiday, with many investors happy to take profits while awaiting Wednesday's earning report from AI-chip heavyweight Nvidia.

The stock fell sharply last week as investors worried that the enthusiasm for artificial intelligence may be overdone, which cast a pall over the wider tech sector after months of strong gains.

In corporate news, shares in Danish wind group Orsted plunged 17 percent after the US government halted construction at an offshore site that is 80 percent complete.

It was the latest move by Trump's administration against wind power and other renewables in favour of oil and gas.

France's Valneva tumbled 23 percent following a US suspension of its chikungunya vaccine over "serious" side-effects, raising doubts about one of the few vaccines for the virus.

Dutch coffee group JDE Peet's jumped 17 percent after it accepted a 15.7 billion euro takeover bid from US drinks giant Keurig Dr Pepper (KDP).

- Key figures at around 1115 GMT -

Paris - CAC 40: DOWN 0.5 percent at 7,926.63 points

Frankfurt - DAX: DOWN 0.2 percent at 24,327.12

London - FTSE 100: CLOSED for Summer Bank Holiday

Tokyo - Nikkei 225: UP 0.4 percent at 42,807.82 (close)

Hong Kong - Hang Seng Index: UP 1.9 percent at 25,829.91 (close)

Shanghai - Composite: UP 1.5 percent at 3,883.56 (close)

Euro/dollar: DOWN at $1.1690 from $1.1722 on Friday

Pound/dollar: DOWN at $1.3496 from $1.3523

Dollar/yen: UP at 147.42 yen from 146.94 yen

Euro/pound: DOWN at 86.62 pence from 86.69 pence

West Texas Intermediate: UP 0.6 percent at $64.06 per barrel

Brent North Sea Crude: UP 0.5 percent at $67.58 per barrel

D.Schaer--VB