This was CNBC's live blog covering European markets.

European markets closed slightly lower on Monday as optimism over the path of U.S. tariffs faded.

Concluding a choppy session, the pan-European Stoxx 600 ended 0.13% lower, with Germany's DAX down 0.17%, France's CAC 40 down 0.26%, and the U.K.'s FTSE 100 down 0.1%.

The travel and leisure sector was up 0.55% after London's Heathrow Airport reopened on Saturday following a power outage caused by a fire at a nearby electrical substation that disrupted Friday service. British Airways owner IAG was up 0.8%.

Swedish defense firm Saab gained 4.5% after UBS upgraded its stock from neutral to buy, saying the company is "well-positioned for the defence spending upside."

Global investors in the region are looking ahead to U.S. President Donald Trump's April 2 tariff deadline.

U.S. stocks made strong gains in early Monday deals. The three major U.S. averages closed higher on Friday, having rallied after Trump told reporters that there could potentially be "flexibility" for his reciprocal tariff plan. 

The Wall Street Journal over the weekend reported the tariffs are expected to be narrower in scope and will likely exclude some industry-specific duties, citing an administration official.

On Monday, Trump announced that the U.S. will impose 25% tariffs on countries that buy oil and gas from Venezuela, with oil prices trading higher.

The president also told reporters at the White House that tariffs on automobiles, aluminum and pharmaceuticals would be announced soon, according to Reuters reporting.

— CNBC's Brian Evans contributed to this report.

Europe stocks close slightly lower

European stocks ended Monday's session narrowly in the red, with the regional Stoxx 600 down 0.13%.

The index closed 0.56% higher last week after two weeks of losses, but is currently on course for its first monthly decline of the year. The Stoxx 600 has nonetheless continued to outperform the U.S. S&P 500, which is down nearly 5% in March.

— Jenni Reid

UK stocks hold slight gains after services sector activity improves

London's FTSE 250 index was 0.15% higher while the FTSE 100 was just above the flatline in late trade amid broader European stock market declines, after U.K. service sector activity was shown to have improved in March.

The Purchasing Managers' Index published by S&P Global earlier in the session showed output in Britain's dominant services sector rose to a six-month high, with a reading of 52, up from 50.5 in February.

However, the smaller manufacturing sector moved deeper into contraction territory.

The readings come ahead of the government's spring fiscal statement on Wednesday, expected to contain announcements on spending cuts to the benefits system and the civil service, as well as an updated assessment of the U.K. economy from the independent Office for Budget Responsibility.

"An upturn in business activity in March brings some good news for the government ahead of the Chancellor's Spring Statement, offering a respite from the recent flow of predominantly downbeat economic data. However... one good PMI doesn't signal a recovery," Chris Williamson, chief business economist at S&P Global Market Intelligence, said in a statement.

While business activity improvements are being driven by areas such as financial services, consumer-facing businesses and manufacturers are struggling with challenges including increased costs, low confidence and weak demand, exacerbated by global uncertainty from U.S. President Donald Trump's tariff policies, Williamson added.

— Jenni Reid

Bayer shares drop after U.S. court orders $2.1 billion payout

Shares of German biotech firm Bayer plummeted to the bottom of the Stoxx 600 on Monday, after a U.S. court ordered the firm to pay $2.1 billion in damages relating to its Roundup weed killer.

The company said over the weekend that the State Court of Cobb County, Georgia, had reached the verdict on Friday.

"We disagree with the jury's verdict, as it conflicts with the overwhelming weight of scientific evidence and the consensus of regulatory bodies and their scientific assessments worldwide," Bayer said in a statement. "We believe that we have strong arguments on appeal to get this verdict overturned and the excessive and unconstitutional damage awards eliminated or reduced."

According to news agency Reuters, thousands of lawsuits have been brought against the Roundup weedkiller, which has been said to be linked to health problems, including cancer.

Previous cases have ended in Bayer agreeing $10.9 billion settlement, as well as being slapped with a string of multimillion-dollar court-ordered payouts.

Shares of Bayer were 7.5% lower at 1:56 p.m. in London.

— Chloe Taylor

Saab rises 6% after UBS upgrades to buy

Swedish defense firm Saab topped the Stoxx 600, after UBS upgraded the stock from neutral to buy.

UBS raised its target price for Saab shares from 250 Swedish krona ($24.73) to 525 Swedish Krona. The stock was last trading up 6.2%.

"We believe Saab's product portfolio is well positioned for the defence spending upside," UBS analysts said in a note on Monday.

"As a Swedish company, Saab not only has exposure to the double digit planned budget increases but also has new opportunities to negotiate exports to NATO members after Sweden's accession," they added.

— Sawdah Bhaimiya

German business activity higher, as manufacturing rebounds

German business activity grew at its quickest rate in 10 months in March, buoyed by its manufacturing sector which grew for the first time in nearly two years, according to a survey.

The German Purchasing Managers' Index, collected by S&P Global, increased to 50.9 in March, up from 50.4 in February. A reading above 50 indicates an expansion. Meanwhile, manufacturing production rose to 52.1 in March, up from 48.9 in February.

The manufacturing index was still in contraction territory but increased to 48.3 from 46.5 in February. However, the services sector declined to 50.2, from 51.1 the prior month.

The growth in the manufacturing sector was pinned on strong demand with a modest rise in new orders since March 2022, according to the report.

"Economic growth in the first quarter looks promising, with the composite PMI staying above the expansionary threshold every month," Cyrus de la Rubia, chief economist at Hamburg Commercial Bank said. "Thanks to the fiscal package, this could mark the beginning of a more sustained recovery."

Germany's parliament voted in favor of a major fiscal package last week, which would see increased spending on infrastructure and defense.

Rubia noted that the increase in manufacturing production in five of the past six months, may be due to tariff concerns in the U.S.

"It might be linked to the import boom from the US, where companies are snapping up goods from abroad to get ahead of looming tariffs. If that's the case, we could see a bit of a setback once those tariffs kick in," he added.

— Sawdah Bhaimiya

Bank of England may raise rates again by the end of the year, Wellington Management says

Paul Skinner, investment director at Wellington Management said the Bank of England may be raising rates again by the end of the year, amid persistent services inflation and wage growth.

"We think the low might be in now and by the end of this year, the U.K. could be raising rates again," Skinner told CNBC's "Squawk Box Europe" on Monday, referring to the BOE's recent decision to hold interest rates steady in March and keep the central bank's benchmark rate at 4.5%.

"If you look at what we've got in the U.K., we've got 6% wage growth across all sectors, we've got 5% services inflation and we've got the Bank of England raising their GDP, and they're going to say they cut rates. Does it really all make sense?"

Skinner noted that the U.K. is in a structurally "more inflationary environment" and questioned the BOE's response.

"The Bank of England have hardly been inflation fighters for the last 10 years now, so if that long end of the yield curve in gilts unhinges, it won't be Rachel Reeves fault, it'll be the Bank of England," he added.

— Sawdah Bhaimiya

Turkey's stock index opens slightly higher after weekend of mass protests

Turkey's benchmark BIST 100 index opened roughly 3% higher in Istanbul, recouping some of last week's dramatic losses following the controversial arrest of Istanbul Mayor Ekrem Imamoglu, who is seen as Turkish President Recep Tayyip Erdogan's strongest political rival.

The index is still down 14.4% from the previous week.

The Turkish lira was trading at 37.772 to the dollar at around 11:00 a.m. local time, with the greenback up roughly 1% on the Turkish currency.

— Natasha Turak

White House reportedly plans to narrow scope of Trump's April 2 tariffs

The White House is planning to issue a more narrow slate of tariffs than previously expected on April 2, according to a Wall Street Journal report on Sunday, citing an administration official.

Previously announced reciprocal duties are still planned to be announced on April 2, the report said, albeit likely without sector-specific duties that President Donald Trump had aimed at sectors including automobiles, pharmaceuticals and semiconductors.

— Brian Evans

European markets: Here are the opening calls

European markets are expected to open in positive territory Monday.

The U.K.'s FTSE 100 index is expected to open 14 points higher at 8,667, Germany's DAX up 83 points at 22,966, France's CAC 9 points higher at 8,057 and Italy's FTSE MIB 171 points higher at 38,391, according to data from IG. 

Traders will be keeping an eye on preliminary purchasing managers' index (PMI) data from the U.K., France, Germany and the euro zone to get a gauge of business activity in the region's manufacturing and services sectors.

— Holly Ellyatt