Picture: Dado Ruvic

London - European shares inched down towards their lowest level in more than three months on Monday as doubts grew about Beijing's ability to manage the world's second-biggest economy.

The pan-European FTSEurofirst 300 index fell 0.1 percent, near its lowest level since late September. Britain's FTSE 100 declined 0.4 percent while Germany's DAX weakened by 0.3 percent.

China let its yuan currency strengthen for a second straight session on Monday, in a move that might calm concerns about how ready Beijing is to let the currency depreciate.

However, the development added to doubts over Beijing's ultimate policy intent, and it failed to stop investors selling Chinese shares.

Figures out over the weekend also showed Chinese consumer inflation stuck at a subdued 1.6 percent in December, while producer prices were down a steep 5.9 percent on the year - a deflationary pulse that is being felt across the globe.