Europe's Stoxx 600 gains on banks boost; French stocks slide on fiscal fears

European stocks surged on Monday as financial sector gains outweighed losses in other sectors. The Stoxx 600 index, a gauge of 600 large-cap stocks across Europe, climbed 0.4 percent, climbing back from last week's four-month low. French equities, however, dropped to a six-month low on concerns over the country's fiscal situation and Schneider Electric's recent acquisition of US software firm PTC.

The CAC 40, France's main stock index, declined 0.8 percent. The euro also hit a 17-month low amid fears of a potential sovereign debt crisis resurgence in the euro zone. Analysts noted that bond market volatility is affecting both stocks and currencies, potentially impacting earnings. In Spain, Prime Minister Pedro Sanchez called a snap election for November 29 to bolster his position following a fragmented parliament's rejection of government measures to tackle housing protests.

European banks showed signs of recovery, contributing to a 1.1 percent rise in the Ibex index. While most sectors of the Stoxx 600 index posted gains, industrial goods and services declined 0.7 percent, largely due to Schneider Electric's 10 percent slide following its largest-ever acquisition. Despite a slight dip in oil prices as global crude exports increased and G7 nations promised to boost supplies, energy stocks still managed a 1.1 percent gain.

Euro zone business activity expanded at its quickest pace in nearly three-and-a-half years in September, driven by robust demand despite inflationary pressures from the Middle East conflict. AkzoNobel and Genmab both saw double-digit gains, with the former purchasing a South-East Asian decorative paints business for $1.35 billion and the latter presenting promising trial results for a new ovarian cancer drug.