With Wall Street shut on Monday due to the Labor Day holiday, investors looked to Europe for trading cues. Bourses in the U.K., Germany and France closed flat to lower after regional manufacturing activity for August fell to a 13-month low. The data will likely be closely watched by the European Central Bank as it prepares to hold a policy meeting this Thursday.
Tensions over Ukraine and Russia remain in focus. Reuters reported that the European Union is working on contingencies if Moscow turns off the gas pipes in retaliation to additional sanctions. Separately, Ukraine has begun peace talks with pro-Russian separatists, who say they would be willing to remain as part of Ukraine if granted special status.
Japan's benchmark Nikkei hit a more than one-month high while the yen weakened to a new 2014 low after data showed that summer bonuses and regular pay rose for the second straight month in July. Higher salaries are a vital component of Prime Minister Abe's economic stimulus plan.
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