European shares closed lower yesterday, as strong US growth failed to offset some weak earnings reports and concern the conflict between Russia and Ukraine will escalate.

Holcim’s and HeidelbergCement’s shares fell 4.8 per cent and 2.8 per cent respectively, leaving the STOXX Europe 600 constructions and materials index down 1.5 per cent.

French electrical-gear maker Schneider Electric, down 4.3 percent, also blamed the depreciation of several currencies against the euro for disappointing sales growth in the first half of the year.

Companies in the STOXX Europe 600 that have reported quarterly results so far have seen their sales drop by an average one per cent, StarMine data showed.

While stronger currencies in developed Europe played a role in the decline, some strategists were starting to worry about weaker demand in Europe, which is struggling with low growth and inflation.

“It’s not so much about the currency, there’s no demand from end-customers in Europe,” said Claudia Panseri, global equity strategist at Société Générale. “With prices also falling, I see no growth.”

Bucking the trend was French car maker Peugeot, which surged six per cent after it posted the first positive contribution from its core auto division in three years in the first six months of 2014.

Dutch telecoms group KPN rose 4.7 per cent after reporting a better-than-expected second-quarter core profit, although it was helped in part by cost cuts.

The pan-European FTSEurofirst 300 index closed 0.5 per cent lower at 1,366.52 points after a choppy session.

The index extended losses in the afternoon as Nato said the number of Russian troops and weaponry along the border with Ukraine was increasing to “well over 12,000”.

Fighting between Moscow-backed rebels and government troops has intensified since a Malaysian airliner was shot down earlier this month.

“(The threat of) war is the main drag on markets this afternoon,” Mike Reuter, a broker at Tradition, said.

French oil major Total fell 4.9 per cent after saying that it had stopped buying shares in Russia's Novatek the day of the downing of a Malaysia Airlines flight over Ukraine.

Portugal’s PSI 20 fell 3.3 per cent, underperforming all major European indexes, as retailer Jeronimo Martins and Banco Espirito Santo each fell more than 10 per cent.

Jeronimo Martins is struggling with deflation in its two main markets, Poland and Portugal, and BES fell amid concern it would report a loss and would require a capital increase.

European investors failed to benefit from data showing US economic growth accelerated more than expected in the second quarter, partly due to inventories.