European stocks closed lower yesterday after downbeat US economic data, but rose for the third straight week, as investors continued to view most earnings in the current season positively, including L'Oreal.
The FTSEurofirst 300 index of top European shares fell 0.2 per cent to close at 928.78 points.
Over the week the index gained 2.4 per cent, and it rose 9.2 per cent in the month of July.
Oils took most points off the index, though crude prices recovered to more than $67 a barrel, having fallen immediately after the GDP figures. Results from Total and ENI failed to impress, and the shares fell 2.7 and 7.7 per cent, respectively.
BP, Royal Dutch Shell and Repsol were down between 1.6 and two per cent.
"There are some worries that the market may have gone too far in the last three weeks. Markets have a habit of underplaying or overplaying," said Howard Wheeldon, strategist at BGC Partners.
Across Europe, Britain's FTSE 100, Germany's DAX and France's C AC-40 fell between 0.3 and 0.5 per cent.
The European benchmark index is up more than 43 per cent from its lifetime low of March 9, as investors have become more confident on the prospects of recovery.
However, in 2009, the index has only regained 14.4 per cent of its 2008 losses. The Dow Jones, S&P 500 and Nasdaq Composite were up between 0.2 and 0.4 per cent around the time European bourses were closing.
The Commerce Department said US GDP contracted at an annualised rate of one per cent in the second quarter, and consumer spending had fallen back.
This compared with forecasts from a Reuters poll of a 1.5 per cent contraction.
But the data also showed GDP falling 6.4 per cent in the first quarter, previously reported as a decline of 5.5 per cent.
Analysts were spilt on how the market should interpret the data, though most said it was no cause for alarm.
"I'm surprised by the market's reaction," said Manoj Ladwa, Senior Trader at ETX Capital. "But the consumer spending figures were poor, to say the least. I think we're going to see a couple more negative quarters."
Rises for banks helped to limit the index's losses. HSBC closed 1.6 per cent higher, ahead of results on Monday.
UBS rose 3.9 per cent after reaching an agreement in principle to settle a dispute with the United States about thousands of wealthy Americans suspected of using the Swiss bank to evade taxes.
BNP Paribas, Banco Santander and BBVA rose between 1.5 and 1.8 per cent.
Beauty products firm L'Oreal added 4.4 per cent after reporting sales in line with market expectations and saying it sees business improving during the rest of the year.
PPR surged 10.1 per cent after the French luxury and retail group posted first-half profits that beat forecasts and JCDecaux, the world's second biggest outdoor advertising group, jumped 14 per cent after posting better-than-expected results.
Tyre maker Michelin rose 6.6 per cent after reporting a smaller-than-expected first-half loss.
United Business Media closed 14.3 per cent higher after it said cash generation was ahead of last year, and raised its dividend 7.1 per cent, while reporting a fall in operating profit.
British Airways rose six per cent, after the airline said it has cut operation costs by around 6.6 per cent since last October, but rival Air France-KLM fell 4.1 per cent after posting a wider-than-expected quarterly loss.