European stock markets closed down Monday even though Wall Street rose modestly as investors awaited what could be a crucial speech later from U.S. Federal Reserve chairman Ben Bernanke.

In Europe, the FTSE 100 index of leading British shares closed down 11.70 points, or 0.2 percent, at 5,310.66 while Germany's DAX fell 32.90 points, or 0.6 percent, to 5,784.75. The CAC-40 in France was 6.57 points, or 0.2 percent, lower at 3,840.05.

On Wall Street, the Dow Jones industrial average was up 27.36 points, or 0.3 percent, at 10,416.26 around midday New York time while the broader Standard & Poor's 500 index rose 1.21 point, or 0.1 percent, to 1,107.19.

Most attention is focused on the currency markets after Friday's much stronger than anticipated U.S. jobs data for November stoked talk that the Fed will be able to start withdrawing some of its extraordinary policy measures sooner than had been priced into the markets. The dollar has clambered off multiyear lows against the yen and near 16-month lows against the euro as U.S. Treasury yields increased sharply.

Jane Foley, research director at Forex.com, said the markets "were coming to terms with the fact that the run of cheap financing from the Fed could soon be drawing to a close."

By late afternoon London time, the euro was a further 0.2 percent down on the day at $1.4822. However it had earlier fallen to $1.4757, its lowest level since early November.

Forex.com's Foley said the fear of an earlier than anticipated Fed rate hike has become "sufficiently tangible for the dollar to cast off its role as funding currency and break its negative correlation with risk."

Bernanke's remarks could be key, she added. Bernanke addresses the Economic Club of Washington later and any reaction to Friday's jobs data may well be pivotal as investors position themselves for the year-end and plot out a monetary policy expectations for next year.

David Jones, chief market strategist at IG Index, said one of the main worries in the markets at the moment relates to the year-end and the associated sharp drop off in volumes.

"This looks only likely to worsen in the run up to Christmas, so there is the potential for exaggerated moves in both directions, but overall, while there is the potential for some volatile intraday movement, markets still look quite comfortable within their recoveries from the lows in March, and seem positioned to continue grinding higher," said Jones.