The pan-European STOXX 600 ended 0.4 percent lower with almost all sectors and major bourses in negative territory. Basic resources were the biggest losers on Monday, falling 3.2 percent. The sector was dragged to a two-week low by a slip in copper prices after Trump's health-care setback. Mining giant ArcelorMittal was among the bottom of the benchmark, down more than 4.8 percent.



In contrast, precious metal miners appeared to benefit as investors rushed to safe haven assets with Randgold and Fresnillo both trading in positive territory.



Banking stocks moved 0.56 percent lower on Monday as traders doubted whether Trump would be able to enact his economic agenda given the new administration's failure to repeal and replace Obamacare. Unicredit shares slipped 1.11 percent.



Britain's major telecoms firm, BT, has been fined a record £42 million ($53 million) by the regulator for failing to install high-speed lines for businesses fast enough, in an error that is likely to cost the company around £300 million in compensation, Reuters reported. Its shares were 0.2 percent lower.



Sterling hit its highest level in almost two months on Monday as it climbed to $1.2590 as investors appeared to back the U.K. currency amid U.S. healthcare concerns. However, sterling's appreciation seemed likely to be short-lived given the forthcoming triggering of Article 50 on Wednesday.



In the U.S. markets opened in the red as investors digested the President's failure to repeal Obamacare.





German economy extends 'golden cycle'



On the data front, Germany's Ifo business climate index climbed to its highest level in almost six years in March as sentiment increased to 112.3 points, up from 111.1 points the month previous.



"Even though the German economy could still use some new structural reforms, today's Ifo index illustrates that low-interest rates, a relatively weak euro and continued government consumption should once again extend the current golden cycle," Carsten Brzeski, chief economist at ING, said in a note.



Elsewhere, members of the European Central Bank said at various conferences that the current monetary stance is necessary based on the low core inflation figures. Speaking to CNBC on Monday, Sabine Lautenschläger, member of the ECB's executive board, said the bank "should prepare for a change in the policy and as soon as the data is stable and we have a sustainable path towards our objective of price stability, then we are well prepared to do (it)."



The Bank of England released details of its 2017 stress tests on Monday and stated it would evaluate the risk of sterling slipping by a further 32 percent from today's level to 85 cents by year-end.

German Chancellor Angela Merkel received a boost on Sunday as her conservative party won a regional election in the western state of Saarland. Merkel's Christian Democrats (CDU) bolstered their position as the state's largest party in spite of recent pressure and the rise in prominence of the Social Democrats (SPD) leader Martin Schulz.

Meanwhile, in Russia police detained hundreds of protesters, including opposition leader Alexei Navalny, on Sunday as thousands of people took to the streets to demonstrate against corruption and urged Prime Minister Dmitry Medvedev to resign.



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