European stocks fell on Monday as the first trading day of September began and investors assessed market expectations for interest rates.

The pan-European STOXX 600 index fell 0.42% at the start, with most regional bourses and sectors in the red, and the auto stock index down 1.03%.

Shares of property company Rabbit Move surged about 24% at the open, and were up 21.16% after Australian rival Ria Group said it was considering a bid for the UK-based platform, according to CNBC.

Regional markets closed higher on Friday, the last trading day of August, as investors assessed inflation data from around the world and expectations rose that the US Federal Reserve will start cutting interest rates in September.

Data released last week showed that the Federal Reserve's preferred inflation measure, the personal consumption expenditures price index, rose 0.2% month-over-month in July and 2.5% from a year ago.

The result was in line with economists' estimates.

Excluding food and energy, the index rose 0.2% from the previous month. The data is likely to influence policymakers’ decision on interest rates in September.

Asia-Pacific markets fell today as investors assessed China's business activity figures released over the weekend.

China's official PMI data for August saw the manufacturing PMI fall to a six-month low of 49.1, a faster contraction than the 49.4 seen in July.

Data out of Europe on Monday includes the latest manufacturing PMIs from Spain, Italy, France, the UK and Germany. There are no major earnings releases.

US markets are also closed on Monday for the Labor Day holiday.

The dollar rose by about 0.27% to 146.60 yen, and was trading in the latest trading today at 146.29.

The dollar index against its major peers rose to 101.79 early today, its highest level since August 20.

The euro fell slightly to $1.10430, its lowest level since August 19.

Futures are pricing in a 100% chance of a 25 basis point rate cut on Sept. 18, implying a 33% chance of a 50 basis point cut. Markets are pricing in a 100 basis point cut by December and a 120 basis point cut by 2025.

The pound was steady at $1.3129, remaining close to Friday's low of $1.31095, its lowest since August 23.