European stocks on Monday were weighed down by a slump in Turkey's currency and worries about more restrictions due to rising coronavirus cases in the continent, but strength in automakers helped limit the losses.

The pan-European STOXX 600 fell 0.2%, but recouped some of the early losses.

The global mood soured as the Turkish lira plunged to a near record low after President Tayyip Erdogan replaced a hawkish central bank governor with a critic of high interest rates over the weekend.

Euro zone banks exposed to the country such as Spain's BBVA , Italy's UniCredit, France's BNP Paribas and Dutch bank ING fell between 0.5% and 6%.

"I don't think it's going to have a lasting impact on markets. Formerly when the lira spun out of control, it has had an impact on a couple of euro zone banks with exposure to the country," CMC Markets' David Madden said.

"It might just increase the overall risk-off sentiment. Stock markets were turning over at the back-end of last week even before this."

European stocks saw sharp falls on Friday, easing from a one-year peak as renewed lockdowns in France and concerns over the pace of vaccination drives hit sentiment, with the European Union threatening to block exports of COVID-19 vaccines to Britain.

A British minister warned on Monday that Britons should wait before booking summer holidays abroad, pointing to rising COVID-19 infection rates in Europe.

British Airways-owner IAG, Lufthansa and Ryanair Holdings and travel company TUI fell between 3.3% and 5.6%.

The wider travel & leisure sector fell 1.4%, with Germany set to extend a lockdown to contain the COVID-19 pandemic into its fifth month.

However, another day of gains for automakers limited market losses, with the sector rising for a fifth day in the past six sessions.

Volkswagen AG jumped 5% after Deutsche Bank raised its price target on the stock to 270 euros from 185 euros after the company's ambitious plans to shift to electric car market.

British home improvement retailer Kingfisher rose 4.5% after it reported a 44% jump in full-year profit, driven by the popularity of do-it-yourself projects.