Portugal Colonial - Stock markets slide before central bank decisions on rates

While the Fed is expected to hold rates steady on Wednesday -- causing the dollar to drop -- the Bank of England is forecast to hike once more a day later.

Investors will be keeping a close watch also on the Bank of Japan's own policy decision this week.

The rate announcements come amid rising concerns that inflation will stay high for longer as oil prices head toward $100 per barrel.

"It's a big week ahead for central bank interest rate decisions, which can understandably make investors a bit jittery," noted Russ Mould, investment director at AJ Bell.

A recent run of indicators suggests the US economy and labour market remain resilient even after more than a year of interest rate hikes, meaning the central bank will have to keep open the option of another hike.

The Bank of England is set to hike again with UK annual inflation stubbornly high at 6.8 percent.

Elsewhere on Monday, oil prices extended gains as key producers Russia and Saudi Arabia limit output.

Comments by Saudi Energy Minister Prince Abdulaziz bin Salman will be closely watched when he addresses a conference on crude policy later Monday.

Observers say that, with output unlikely to pick up any time soon, prices could break back above $100 soon.

On the corporate front, shares in troubled developer China Evergrande tanked more than 25 percent at one point after news of the arrest of an unknown number of staff in China.

It bounced back through the day to end only slightly lower.

Officers in the southern city of Shenzhen on Saturday said several employees at financial subsidiary Evergrande Wealth Management had been held but did not explain why.

- Key figures around 1045 GMT -

London - FTSE 100: DOWN 0.3 percent at 7,685.20 points

Frankfurt - DAX: DOWN 0.5 percent at 15,807.34

Paris - CAC 40: DOWN 1.0 percent at 7,304.91

EURO STOXX 50: DOWN 0.8 percent at 4,261.49

Hong Kong - Hang Seng Index: DOWN 1.4 percent at 17,930.55 (close)

Shanghai - Composite: UP 0.3 percent at 3,125.93 (close)

Tokyo - Nikkei 225: Closed for a holiday

New York - Dow: DOWN 0.8 percent at 34,618.24 points (close)

Euro/dollar: UP at $1.0672 from $1.0664 on Friday

Pound/dollar: UP at $1.2408 from $1.2385

Dollar/yen: DOWN at 147.61 yen from 147.84 yen

Euro/pound: DOWN at 86.02 pence from 86.08 pence

Brent North Sea crude: UP 0.6 percent at $94.45 per barrel

West Texas Intermediate: UP 0.7 percent at $91.37 per barrel

Nogueira--PC