Prime Minister Boris Johnson insists the U.K. will leave the EU on Oct. 31 even without a deal, a result many economists say would disrupt British trade and plunge the country into recession. France's CAC 40 slipped 1.1% to 5,459 in midday trading, while Germany's DAX fell 1.3% to 11,941. Britain's FTSE 100 fell 0.4% to 7,169.
U.S. shares were set to open lower with Dow and S&P 500 futures both sliding about 0.7% after the U.S. blacklisted a group of Chinese tech companies that develop facial recognition and other artificial intelligence technology. The Commerce Department says the technology is being used to repress China's Muslim minority groups.
The blacklist effectively bars U.S. firms from selling technology to the Chinese companies without government approval. Separately, NBA Commissioner Adam Silver said the league is not apologizing for Houston Rockets general manager Daryl Morey's since-deleted tweet showing support for anti-government protesters in Hong Kong, even after China's state broadcaster canceled plans to show a pair of preseason games in that country later this week.
Silver is going to Shanghai on Wednesday and said he hopes to meet with officials and some of the league's business partners there in an effort to find some sort of common ground. Trade representatives from the U.S. and China are expected to meet this week for talks, though reports suggest that the discussions will be narrow in scope. Analysts say prospects for a significant breakthrough are scant.
Markets in the Chinese mainland resumed trading after a weeklong holiday, with the Shanghai Composite climbing 0.3% to 2,913.57. Hong Kong shares closed higher despite a bleak assessment by Chief Executive Carrie Lam of the impact of months of increasingly violent protests on the city's economy.
Addressing reporters after a long weekend of more turmoil, Lam said tourism arrivals were down by half and that hotels and retailers were suffering. Hong Kong's third quarter economic data will definitely be "very bad", she said.
Elsewhere, Japan's benchmark Nikkei 225 gained 1.0% to 21,587.78 and Australia's S&P/ASX 200 added 0.5% to 6,593.40. South Korea's Kospi picked up 1.2% to 2,046.25. Hong Kong's Hang Seng climbed 0.3% to 25,893.40.
ENERGY: Benchmark crude oil lost 61 cents to $52.14 a barrel in electronic trading on the New York Mercantile Exchange. It fell 6 cents to $52.75 a barrel on Monday. Brent crude oil, the international standard, fell 65 cents to $57.70 a barrel.
CURRENCIES: The dollar fell to 106.84 Japanese yen from 107.25 yen on Monday. The euro rose to $1.0992 from $1.0971.