European stock markets closed lower yesterday as a series of disappointing corporate results knocked sentiment and overshadowed much better-than-expected British growth figures.

Dealers said Wall Street provided no lead for the afternoon despite a surprise rebound in US consumer confidence and strong earnings at Ford, with investors preferring to consolidate positions rather than take on fresh risk.

The key issue is whether the US central bank will take additional measures to boost the economy, loosening its already very accommodative monetary policy stance, they said.

In London, the FTSE 100 index of leading shares closed down 0.78 per cent at 5,707.30 points. In Paris, the CAC 40 index dropped 0.45 per cent to 3,852.66 points and in Frankfurt the DAX fell 0.38 per cent to 6,613.80 points.

Dealers said British third quarter growth of 0.8 per cent, exactly double forecasts, was welcome news and seemed to rule out the prospect of a return to recession but the data muddied the policy waters. The markets had been speculating that the Bank of England might also take more steps to bolster the economy after a weak second quarter but that seemed less likely after these figures, they said.

Will Hedden at IG Index in London said the outcome “helped instil some confidence for the broader view” ahead of drastic public spending cuts.

However, “today’s number has maybe reduced the chances of more (support measures)... in the short term, putting a dent in expectations for stock markets,” he said, adding that 5,800 points “remains a big barrier”.

Swiss banking giant UBS posted a better-than-expected third quarter net profit but the figures were buoyed by a tax credit, taking the gloss off and leaving the shares down

“European markets are lower on a number of factors, not least the surprise UBS figures which came in below expectations when removing the impact of the tax credit,” CMC Markets analyst Michael Hewson said.

UBS closed down 4.99 per cent.

In New York, the blue-chip Dow Jones Industrial Average was flat at around 1600 GMT while the tech-rich Nasdaq composite index rose 0.22 per cent.

Dealers said news that the Conference Board consumer confidence index for October rose to 50.2 from 48.6 in September, beating forecasts for 49, was welcome but it remained very close to historic lows as Americans fret over high unemployment and a weak housing market.

The unemployment rate stands at 9.6 per cent after the economy shed jobs for a fourth consecutive month in September while US home prices accelerated their decline in August from July.

Elsewhere in Europe, Amsterdam was down 0.52 per cent, Brussels dropped 0.22 per cent, Madrid lost 0.67 per cent, Milan fell 0.33 per cent and Swiss stocks were off 0.57 per cent.

In Asian trade earlier yesterday, the markets were lower. Tokyo fell 0.25 per cent, Shanghai dropped 0.32 per cent and Hong Kong slipped 0.11 per cent.