By Sara Sjolin
LONDON--European stock markets ended a volatile session on a downbeat note, as jitters over Greece's next bailout tranche spooked investors ahead of a meeting of euro-zone finance ministers.
The Stoxx Europe 600 index lost 0.3% to close at 269.53, marking the fourth straight day of declines.
"We're technically in a sweet spot for the market right now and typically markets want to go higher from November to January. But there are a couple of things that are holding us back," said Philippe Gijsels, head of research at BNP Paribas Fortis Capital Markets.
He pointed to uncertainty over Greece's next bailout installation, jitters over Spain not having formally requested a bailout, and nervousness associated with the so-called fiscal cliff in the U.S.
"The fact that there are no solutions yet means markets start to get hesitant. We're basically flat compared to the end of the summer and markets are in wait-and-see mode," he said. "I think it will be quite a relief if we get those three things out of the way."
If they can be resolved, Gijsels said, "markets could rally 10% going into the end of the year."
Shares of Telecom Italia SpA jumped 4.2%, on the rise after it said that Egyptian businessman Naguib Sawiris had expressed interest in acquiring a stake in the carrier.
Peugeot SA shares put on 3.6%. Fitch Ratings said a French state guarantee of as much as EUR7 billion on the car maker's upcoming bond issuance will benefit the car maker, allowing it to offer cheaper loans to customers. The guarantee, however, could also limit the firm's strategic independence, Fitch said.
Heading in the other direction, shares of Davide Campari-Milano SpA lost 5.9%, as the spirits and beverages company said trading in Italy likely will remain volatile in fourth quarter.
For the broader market, Greece grabbed attention as investors looked for developments in the country's efforts to secure its next tranche of bailout money.
Early Monday, parliament passed its 2013 budget, as expected, a move seen as necessary for Greece to qualify for the next and much needed installation of financial aid. The budget's approval comes ahead of a meeting of euro-zone finance ministers later Monday, with Greece likely to top the agenda.
Analysts at Societe Generale said in a note, however, that it "seems unlikely that any agreement [to disburse the aid] will be finalized at that time."
"The hurdle lies in the fact that however we twist and turn the equations, Greece needs more money, both in terms of funding flows and debt levels," they said.
"In reality the country needs significant debt forgiveness and some form of the Marshall Plan. In the near term, a political patch seems the most likely outcome with a more sustainable solution only likely to be found after the Germany election in autumn 2013," they added.
Against this backdrop, the Athens General Index slumped 3.6% to 772.85, with shares of National Bank of Greece SA tumbling 14%.
Japan's economy also came in for attention, after the government said gross domestic product in the third quarter shrank 0.9%, or 3.5% on an annualized basis.
In Germany, shares of Deutsche Lufthansa AG gained 1.1%, as the airline said passenger volume for October rose 2.7% on the year.
The DAX 30 index gained 0.1% to close at 7,168.76.
The U.K.'s FTSE 100 index was marginally lower at 5,767.27. Shares of InterContinental Hotels Group PLC rose 1.4%, after Exane BNP Paribas lifted the firm to outperform from neutral.
Outside the main index in London, shares of aerospace and defense firm Cobham PLC tumbled 9.7%, after it warned profitability in 2013 will be lower than what is expected for 2012.
Among French shares, Publicis Groupe SA rose 1.7% as the advertising and public-relations company's trading update showed revenue rose 7% in October.
Shares of Compagnie de Saint-Gobain SA lost 1.2%, as Moody's Investors Service changed the outlook on the construction firm to negative from stable.
The CAC 40 index closed 0.4% lower at 3,411.65 in Paris.
Outside the major indexes, shares of SAS AB rose 2.3%, as third-quarter results showed the airline swinging to a net profit of 1.32 Swedish kronor (20 cents) a share from a loss of 0.65 kronor in the year-earlier quarter.
The company also provided details of a restructuring plan announced in September, aiming at asset divestitures valued at about 3 billion kronor plus annual savings of about the same amount.
Meanwhile, shares of shipping and energy company A.P. Moeller-Maersk AS added 1.7%, gaining as investors reacted to a well-received third-quarter earnings report.
Write to Sara Sjolin at AskNewswires@dowjones.com