European shares fell yesterday as investors locked in profits at the end of a strong month, while results from some of the region’s biggest names also weighed.

The STOXX 600 fell 0.2 per cent, ending at its lowest in more than three weeks and suffering a third consecutive day of losses.

The pan-European benchmark, however, ended January with a 2.1 per cent monthly gain, as optimism over earnings and economic growth outweighed recent bond market jitters and concerns over a rising euro.

“We’ve the impression that investors are looking for a pretext to take a breather and lock in some of their gains,” said Andrea Tueni, head of sales at Saxo Banque Paris.

Results were centre stage yesterday, with investors particularly impatient with earnings misses in this high-valuation environment.

Ericsson sank 9.2 per cent after the telecoms equipment maker reported a deeper than expected loss and said the Chinese market would continue to decline.

Debt collector Intrum Justitia tumbled by 8.9 per cent after its fourth-quarter revenue and earnings missed expectations.

H&M shares fell 10.6 per cent after fourth-quarter profit and profit margins fell. The company said it would open far fewer stores in 2018. It was a dark day for struggling UK outsourcer Capita and a pay day for short-sellers, with shares down 47 per cent after the company warned on profit, announced a rights issue and suspended its dividend.

Yet investors remained optimistic on European equities in general. “It has been a very strong start to the year, and with that, markets can always take a pause, but there is nothing from the earnings season so far that would not support a continued constructive view on the market,” said Britta Weidenbach, head of European equities at Deutsche Asset Management.

To date in 2018, European equity funds have registered the strongest inflows across all major regions, drawing in more than $22 billion, HSBC found. Last year Europe accounted for more than a third of global equity flows.

In an early sign of the negative impact forex could have on some European businesses, Infineon shares fell one per cent after the chipmaker cut its revenue guidance because of the weak dollar.

“I think there will be selected companies with a potential negative impact from the dollar, but the question is, is it a net negative, and what is the underlying story?” said Ms Weidenbach.

Overall fourth-quarter earnings for the STOXX 600 are expected to increase by 11.9 per cent year on year, said the latest Thomson Reuters data.