European shares fell on Thursday as dismal earnings reports and weaker-than-expected German GDP data took the shine off the U.S. Federal Reserve's vow to keep stimulus taps open to shore up a coronavirus-ravaged economy.
The pan-European STOXX 600 fell 0.8%, dragged by losses in carmakers, insurers and banks.
Britain's Lloyds Banking Group fell 8.9% as it swung to a rare pretax loss in the first half of 2020, while Spain's BBVA dropped 5.9% as it reported a near 50% decline in second-quarter net profit.
Germany's Volkswagen was down 5% as it unveiled a first-half operating loss and slashed its dividend, while French carmaker Renault fell 3% as it posted a record net loss of 7.292 billion euros ($8.58 billion) in the first half of the year.
"Today's trading session in Europe is dominated by a whole flurry of earnings reports and the fact that some of these numbers, although in line, were worse than the unofficial earnings estimates," said Maarten Geerdink, head of European equities at NN Investment Partners.
"When companies report in-line or quasi in-line numbers, that's no longer good enough for the markets to reward them."
Among the bright spots, Anheuser-Busch InBev jumped 6.1% after saying it was encouraged by a global beer sales recovery in June.
British drugmaker AstraZeneca gained 3.3% as it backed its 2020 forecasts, helped by strong sales in lockdowns of a diverse product range that now includes a potential coronavirus vaccine.
European stocks were on course to record their fourth straight month of gains, recovering from a pandemic-inflicted slump in March as trillions of dollars in stimulus and hopes of a COVID-19 vaccine drew buyers back into risky assets.
Asian stock markets and Wall Street overnight gained as Fed Chairman Jerome Powell promised to "do what we can, and for as long as it takes," to limit economic damage from the pandemic and boost growth.
However, the gains failed to spread to Europe as preliminary data showed the German economy contracted by a bigger-than-expected 10.1% in the second quarter, its steepest plunge on record as household spending, business investment and exports collapsed during the COVID-19 pandemic.
Weak oil prices weighed on the energy sector even as Royal Dutch Shell avoided its first quarterly loss in recent history after bumper earnings in its trading business, while France's Total said it would maintain its dividend.
This story has been published from a wire agency feed without modifications to the text.