Portugal Colonial - Stock markets mixed before key rate calls

Europe's main indices steadied but Madrid was down 0.7 percent in early afternoon deals, as Spanish Prime Minister Pedro Sanchez and his right-wing rival try to head off a fresh vote after an inconclusive snap election resulted in a hung parliament.

Asia's top stock markets were a mixed bag amid concern over weakness in the Chinese economy.

China's top leaders said the world's second-biggest economy was facing "new difficulties and challenges" in a meeting of the 24-person Politburo on Monday.

In a bleak update for the eurozone, a key survey showed economic activity shrank at its fastest rate for eight months in July, as a contraction gathered pace on the back of cuts in manufacturing.

The painful PMI data comes as the European Central Bank is eyeing a further rate hike on Thursday in its quest to tame inflation.

The ECB "will raise rates this week as planned, but with economic weakness spreading, the outcome of the September meeting is becoming an increasingly close call", noted UniCredit economist Tullia Bucco.

"With headline inflation decelerating and the labour market starting to soften, a forward-looking analysis would point to no more tightening beyond this week."

Across the Atlantic, the Federal Reserve is widely expected to announce another increase in borrowing costs on Wednesday.

A string of positive US data in recent months has given the Fed some room to take its foot off the pedal and allow the economy to avert a feared recession.

Separate PMI data Monday showed the UK's private sector appearing to have slammed the brakes on growth.

"The UK economy has come close to stalling in July which, combined with gloomy forward-looking indicators, reignites recession worries," said Chris Williamson, chief business economist at S&P Global Market Intelligence.

"July's flash PMI survey data revealed a deepening manufacturing downturn accompanied by a further cooling of the recent resurgence of growth in the service sector."

On the corporate front, shares in British online supermarket Ocado surged more than 10 percent after it settled a dispute over robot patents with Norwegian company AutoStore.

- Key figures around 1100 GMT -

London - FTSE 100: DOWN 0.1 percent at 7,659.89 points

Frankfurt - DAX: UP 0.1 percent at 16,197.25

Paris - CAC 40: DOWN 0.3 percent at 7,413.44

EURO STOXX 50: DOWN 0.3 percent at 4,378.37

Tokyo - Nikkei 225: UP 1.2 percent at 32,700.94 (close)

Hong Kong - Hang Seng Index: DOWN 2.1 percent at 18,668.15 (close)

Shanghai - Composite: DOWN 0.1 percent at 3,164.16 (close)

New York - Dow: FLAT at 35,227.69 (close)

Euro/dollar: DOWN at $1.1091 from $1.1131 on Friday

Pound/dollar: DOWN at $1.2840 from $1.2852

Euro/pound: DOWN at 86.38 pence from 86.56 pence

Dollar/yen: DOWN at 141.20 yen from 141.77 yen

Brent North Sea crude: UP 0.6 percent at $81.54 per barrel

West Texas Intermediate: UP 0.6 percent at $77.55 per barrel

burs/bcp/lth

A.P.Maia--PC