The world's top cellphone producer Nokia and car maker DaimlerChrysler dragged European shares down yesterday, but defensive health stocks like Aventis supported.
The world's biggest cosmetics group L'Oreal ended up 2.2 per cent on expectations of strong first-quarter sales.
But traders said the stock could slip today because the firm reported a rise of only 1.3 per cent after the close as the weak dollar ate into growth across most product lines and markets.
Finland's Nokia remained under pressure for the second day running after telling investors on Tuesday that sales dipped in the first three months of the year and earnings would be below market expectations.
"Cyclical and growth stocks are more vulnerable because expectations are higher on a more positive macro background," said a trader at a European bank.
Nokia extended Tuesday's 17 per cent tumble by shedding a further 3.7 per cent in heavy volume as a host of brokers downgraded recommendations and price targets.
Germany's DaimlerChrysler also eroded sentiment as it fell 1.2 per cent on news that the burden on earnings from its 45-per cent-owned Toll Collect business will be heavier, increasing worries about profits this year.
The FTSE Eurotop 300 index of pan-European blue chips ended down 0.3 per cent at 1,009.9 points. Amid moderate volume, the number of losers to gainers was roughly equal.
The narrower DJ Euro Stoxx 50 index shed 0.5 per cent to 2,851.8 points.
Strategists said market jitters about a global economic slowdown had faded after last Friday's strong jobs report showed economic growth in the United States could be sustained.
Growing confidence then gave way to worries earlier this week that the US Federal Reserve could derail the US economy and global growth by raising rates too soon.
But yesterday, equity markets turned the spotlight on the corporate field, with investors wanting to know if profit growth will measure up to the lofty expectations built up recently.
"Investors are looking at issues to do with input costs because of higher commodity prices," said Mark Tinker, chief strategist at brokers Execution Ltd.
"Do companies have enough pricing power and market share to pass on higher costs is the next big question."