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European markets were hit hard in morning trade Monday as the renewed threat of higher U.S. interest rates knocked sentiment with little corporate news around to provide any stimulus.
     The FTSE 100 fell about 67 points, or more than 1 percent, to trade at 6,164.90 amid another spate of corporate earnings reports.
     The CAC 40 in Paris slumped more than 2 percent to 4,287, a fall of 94 points, despite some encouraging economic data.
     The Xetra Dax in Frankfurt reversed an earlier gain to trade nearly two percent lower at 4,999, a loss of 100 points.
     The SMI in Zurich slipped almost 1.6 percent to trade at 6,779, a fall of 109 points.
     The Dow Jones industrial average fell 136 points Friday as renewed speculation of higher interest rates followed stronger-than-expected inflation data. The index lost 2.3 percent last week. The tech-heavy Nasdaq fared better, slipping 1.52 points while the S&P 500 dipped 12.31.
     U.S. markets were expected to open slightly stronger Monday, with Globex S&P futures trading at 1,330.8 while fair value was quoted at 1,335.55.
     The FTSE in London faces another hectic round of earnings, with investors focused on banking stocks. HSBC Holdings (HSBA) pared some of its earlier strong gains, up almost 0.6 percent. The banking group reported first quarter earnings ahead of expectations.
     Fellow Asian heavyweight Standard Chartered (STAN), Barclays (BARC) and NatWest (NWB) also report this week. But most other blue chip financial stocks were in the red.
     Media group Pearson (PSON) was 0.5 percent higher after reporting a sharp fall in first-half earnings as it absorbs Simon & Schuster's education business and reorganizes after selling non-core entertainment units. The 17 million pound ($17.5 million) pre-tax loss compares with a 358 million pound profit in the same period last year. Its shares were up 0.5 at 1,262 pence.
     BAA (BAA), operator of London's three main airports, reported a rise in first quarter pre-tax profits to 155 million pounds ($251 million) from 141 million a year earlier. The shares were marginally higher in mid-morning trade.
     Cadbury Schweppes (CBRY) was about 1 percent lower after securing the drawn-out sale of part of its overseas soft drinks business to Coca-Cola (KO).
     Outside the FTSE 100, leisure group Greenalls (GREW) will be in focus as Whitbread (WTB) and Japanese bank Nomura are linked to the purchase of its pub assets. Whitbread was thwarted in its pursuit of the pub unit of Allied Domecq (ALLD). Whitbread shares were almost 1 percent higher, while Greenalls was up 1.7 percent.
     Interest rates will also make their way onto the agenda as the Bank of England's rate-setting Monetary Policy Committee prepares for a two-day meeting starting Tuesday. Few analysts expect a change.
     Frankfurt received little lift from corporate news. Deutsche Telekom (FDTK) reversed earlier light gains to trade just about 1 percent lower amid continued speculation about a purchase of some or all of Sprint (FON).
     Most of the action was downwards though, with DaimlerChrysler off 1.3 percent after last week's disappointing earnings. Even reports of fresh talks with Italian aerospace group Alenia failed to lift the shares.
     Sports and leisure goods-maker Adidas Salomon (FADS) is the first of a string of Dax firms reporting first-half results this week, with its shares up 2.1 percent despite expectations of flat earnings. The results are expected later Monday.
     Retail stocks were particularly weak, with Karstadt (FKAR) down over 3 percent, and rival Metro (FMEO) down a similar amount.
     Banking stocks were marked down ahead of the latest U.S. employment data, with Dresdner Bank (FDRB) leading the decliners as it tumbled almost 5 percent.
     Paris was fixed on this week's looming denouement of the takeover battle in the banking sector, with all three banks involved claiming victory.
     Hostile predator Banque National de Paris (PBNP) said Monday that its bids for Paribas (PPM) and Société Générale (PGLE) were close to success. The targets, who have their own agreed merger plan, naturally disagreed.
     BNP was down 2.3 percent, SocGen traded 1.5 percent lower, while Paribas fell 3.4 percent.
     Another banking battle should also advance Monday: the attempt by Spain's largest bank, Banco Santander Central Hispano to take over Portugal's Champalimaud. The Portuguese authorities have attempted to block a deal but the European Commission is expected to force them to climb down.
     BSCH was almost 2 percent lower in Madrid mid-morning trade.