By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- European stock markets moved lower on Monday, mirroring a negative mood in Asia, after Chinese manufacturing data added to fears about a slowdown in the world's second-largest economy.

The Stoxx Europe 600 index fell 0.7% to 320.43, adding to the loss for January, when the benchmark posted the biggest monthly decline since June.

Among notable movers, shares of Lloyds Banking Group PLC (LYG) dropped 2.9% after the bank said it would set aside an extra 1.8 billion pounds ($3 billion) to repay customers who were mis-sold payment-protection insurance. Despite the extra provision, the bank said underlying earnings for the full-year would come in ahead of expectations and that it would reinstate dividends.

RTL Group SA dropped 2.3% in Brussels after Goldman Sachs cut the broadcaster to neutral from buy.

On a more upbeat note, shares of Ryanair Holdings PLC gained 5.1% after the budget airliner confirmed its full-year guidance, even as it swung to loss in its fiscal third quarter.

More broadly, European stock markets weakened as investors digested the latest data from China. The official purchasing managers' indexes out over the weekend showed growth slowed down in the manufacturing and services sectors in January. HSBC's PMI for China showed earlier in January that the manufacturing sector unexpectedly contracted for the month, igniting fears of an economic slowdown and ultimately sparking a wider selloff in emerging-markets assets.

With the China data in mind, investors largely shrugged off PMI data for the euro zone. The final numbers on the manufacturing sector for January showed the recovery at factories broadened, with the reading on Greece pointing to expansion for the first time since August 2009. For the combined euro zone, the manufacturing PMI rose to 54, signaling the fastest improvement since May 2011. A reading above 50 indicates expansion.

Howard Archer, chief U.K. and European economist at IHS Global Insight, said economic growth in the euro zone is likely to gradually strengthen in 2014 as a number of factors improve.

"Reduced fiscal squeezes, very accommodative monetary policy, improving global growth and sharply reduced sovereign debt concerns provide a more encouraging backdrop than the euro zone has faced for some time," Archer said in a note.

PMI data for the U.K. also showed the manufacturing sector there continued to expand in January, albeit at the slowest pace in three months.

The U.K.'s FTSE 100 index rose 0.1% to 6,517.74. Germany's DAX 30 index dropped 0.2% to 9,287.27, and France's CAC 40 index lost 0.1% to 4,160.14.

Asian markets closed lower on Monday, while U.S. stock futures pointed to a firmer open on Wall Street.

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