LONDON (Dow Jones)--Crude futures traded lower Monday, sliding more than $2 a barrel, as bearish sentiment emanating from a sell-off in the Chinese stock market transferred to European equities, the recent bellwether for oil prices.

The dollar also edged higher against the euro, piling further pressure on commodities denominated in the greenback.

"The (energy) market is looking to the damage being wrought upon the Chinese stock market and upon the stronger US dollar, and upon the prospective, material weakness in the European and North American stock prices, and taking crude lower," said Dennis Gartman, editor of The Gartman Letter.

At 1204 GMT, the front-month October Brent contract on London's ICE futures exchange was lower $1.68 at $71.11 a barrel.

The front-month October contract on the New York Mercantile Exchange was trading $1.54 down at $71.20 a barrel.

The ICE's gasoil contract for September delivery was $17.25 lower at $579.50 a metric ton, while Nymex gasoline for September delivery was lower 127 points at 204.91 cents a gallon.

A bank holiday in the U.K. sidelined many market participants, insuring thin liquidity. However, the oil market took its cue from weaker equities after news of a slow down in lending in China sent the country's stock market tumbling.

The sell-off showed optimism over a recovery in the global economy may have been premature as the Chinese equity market has became a leading indicator of global economic health, said Eugen Weinberg, analyst at Commerzbank in Frankfurt.

Major moves lower by the index would show economic woes have been "underestimated" he said.

Meanwhile, Japan's Ministry of Economy, Trade and Industry said the major oil consumer's crude oil imports by refiners and trading companies fell 18% from a year earlier, casting further doubts on recent hopes over the worldwide economic recovery, and therefore rising crude demand.

A dearth of macro-economic data due for release this week, including a interest rate decision by the European Central Bank, and unemployment data in the U.S. and E.U., are expected to provide plenty of talking points for the oil and equity markets, while crude traders will also focus on a meeting by the Organization of Petroleum Exporting Countries Sept. 9.

The oil-producing group is widely expected to keep its production quotas unchanged after a member of Kuwait's Supreme Petroleum Council said Sunday OPEC is unlikely to agree on cutting its crude production at their meeting in Vienna next week.

The sentiment echoes that of Shokri Ghanem, head of the Libyan National Oil Company, who said the group is likely to hold output steady.

"OPEC's decision will have little effect because there will probably be no cuts made, so the question is how the market will react and that will depend on market sentiment that day and not fundamentals," Weinberg said.

-By Reza Amanat, Dow Jones Newswires; 4420-7842-9487; reza.amanat@dowjones.com