European shares closed lower yesterday with banking and oil stocks leading the fallers, as investors booked profits ahead of the US third-quarter corporate results season.

The pan-European FTSEurofirst 300 index of top shares was down 0.4 percent at 988.76 points. The benchmark index is up 19 per cent this year and has surged 53 per cent since hitting a record low in early March. Across Europe, the FTSE 100 index was down 0.6 per cent; Germany’s DAX was 0.3 per cent lower and France’s CAC 40 fell 0.4 per cent.

“We are just seeing a little bit of profit taking. There is no bad economic data out there,” said David Buik, partner at BGC Partners.

“We have Alcoa’s results tonight and then the earnings show will be on the road. Overall earnings are expected to be good in comparison to this time last year but everyone will be looking to see how companies guide for the fourth quarter,” Mr Buik said.

Alcoa is due to kick off the results season in the United States after the market closes.

In Europe, bank shares featured among the biggest losers on Wednesday. Banco Santander fell one per cent following a 14.1 billion reais ($8.05 billion) share flotation for its Brazil unit, while BNP Paribas, Société Générale and UBS were down 1.2 to 5.9 per cent.

Oil stocks were under pressure as crude prices fell 1.8 per cent. BG Group, BP, Royal Dutch Shell and Total were down 0.7 to 1.7 per cent.

J Sainsbury, Britain’s third-biggest grocer, was down 3.3 per cent after posting slower quarterly sales growth and saying growth in the industry would moderate further as food price inflation eases. “We think there may be a debate as to whether Sainsbury could be beginning to lose market share both to an improving Tesco and to the fresh food specialists such as Morrison and Waitrose,” Credit Suisse analysts said.

Metro slipped 3.2 per cent after a 5.2 per cent stake in German retailer owned by major investor Otto Beisheim Group was placed at €35 per share, a source close to the transaction said.