Source: Sharecast
The pan-regional Stoxx 600 was down 0.5%, while Germany’s DAX and France’s CAC 40 were down 0.3% and 1.3% respectively.
Trump’s announcement that he had sacked Lisa Cook over mortgage fraud allegations hit Asia markets and also drove US futures into the red. Cook on Monday said the president did not have the authority to remove her and that she would not resign.
Neil Wilson, UK investor strategist at Saxo Markets, said: "It’s the latest salvo in the Fed wars and shows how increasingly politicised the central bank is becoming. It’s going to be virtually impossible for the next chair to do anything other than Trump’s bidding."
The Fed has been in Trump's sights for months as he demands the bank cut interest rates, despite fears his global tariff war will trigger inflation. Fed Chair Jerome Powell has been a constant target.
Meanwhile, France faced more political turmoil after the country’s three main opposition parties said they would not back a confidence vote called by Prime Minister Francois Bayrou for 8 September over his budget plans.
The news hit French financial stocks, with AXA, BNP Paribas and Credit Agricole all down.
Wilson said: "Markets invariably struggle with this sort of political uncertainty but in this case it’s a bit more obvious what is at stake. The vote is over the budget which is required for fiscal consolidation - delaying or ditching reforms will make the debt situation more untenable, and weigh on the economy.
"But there is a wider issue at stake over the fragile nature of the ruling coalition and whether Macron is just delaying the inevitable election that could see Marine Le Pen’s FN take over. The problem France has is that the fudge Macron worked to keep the FN out of power was never going to survive a serious vote. For now, political uncertainty = economic weakness."