London: European shares fell on Thursday after downbeat inflation and manufacturing data from the United States pointed to sluggish growth, overshadowing optimism for corporate results after strong earnings from JPMorgan.
The pan-European FTSEurofirst 300 index of top shares closed 1.1% lower at 1,033.56 points, posting its biggest one-day percentage fall since 1 July.
Successive gains over six sessions helped the FTSEurofirst 300 index to rise 8% in the last 1-1/2 weeks before it closed a touch lower on Wednesday.
Investors’ increasing confidence in the pace of economic recovery was punctured by new economic data in the US including a fall in producer prices for a third straight month in June. Factory activity growth in the US Mid-Atlantic region also fell unexpectedly.
Earlier, shares received a brief boost from strong results from JPMorgan Chase, which kicked off the quarterly earnings season for US banks with a sharp rise in second-quarter profits after setting aside less money for loan losses.
The negative macroeconomic data added to heightened jitters that the recovery was losing steam, a day after minutes of the US Federal Reserve’s latest meeting showed officials trimmed their growth forecasts for this year and mulled further credit easing if the economic recovery faltered.
“Concerns about the macroeconomic situation are so high right now that even the good results that have been published by companies have not been able to push the markets higher,” said Oliver Roth, head trader at Close Brothers Seydler Bank in Frankfurt.
Google will report quarterly results after Wall Street closes on Thursday, while Citigroup and General Electric are due to report numbers on Friday.
In Europe banking shares were lower, having briefly gained earlier on the back of the JPMorgan results. Barclays, BNP Paribas and Deutsche Bank were off 2.5% to 4.2%.
Greek banks, however, rose 6.5% after Piraeus Bank offered to buy stakes in ATEbank and Hellenic Postbank, sparking hopes of consolidation in a sector that has been hammered by fears about the country’s debt crisis.
Piraeus Bank and ATEbank added 12.7% and 6.5% respectively.
Among individual movers, SKF dropped 4.8%. The world’s biggest maker of bearings scaled back its European demand forecast and saw growth slowing in Asia as it reported better than expected second-quarter results.
On the upside, Ferrovial surged 9.7% after a Canadian pension fund launched a bid worth $3.4 billion for Australia’s Intoll group, the Spanish firm’s partner in Canadian toll road 407-ETR.
GlaxoSmithKline added 1.8% in a relief rally after a US panel of health experts voted to keep the drugmaker’s diabetes pill Avandia on the market but with new warnings on heart risks.
But Glaxo’s rise was limited by news of a hefty £1.57 billion ($2.4 billion) legal charge for Avandia and other long-standing legal cases.
Across Europe, Britain’s FTSE 100, Germany’s DAX and France’s CAC 40 fell 0.8% to 1.4%.