European blue chips weakened yesterday as fears that the recent stock market rally could run out of steam were reinforced by disappointing results from some US corporates, including car giant Ford.
"I don't buy into this view that everything is turning rosy again," said Jamie Sandison, European portfolio manager at Edinburgh Fund Managers.
By 1555 GMT, with only Frankfurt's DAX still officially trading, the FTSE Eurotop 300 index was 0.58 per cent down at 866 points while the narrower DJ Euro Stoxx 50 index was 0.67 per cent lower at 2,486.50 points.
Retailers, led by British retail group Marks & Spencer, added most weight to the DJ European Stoxx 50 decline, after the UK firm's sales report failed to impress.
Traders said bad earnings news from Ford, which reported a 27 per cent fall in second-quarter profits, and a warning from telecom gear supplier Lucent Technologies that it would not meet profitability targets in the current fiscal year, outweighed robust earnings news from chip giant Intel.
This raised concern that corporate profits may not justify the recent rally in European stock markets.
"I'm not holding my breath for a second half recovery. Liquidity and momentum may move markets in the short-term but if there's not something of substance behind it, it's not usually sustained. And there's not sufficient substance behind this rally," said Edinburgh Fund Managers' Sandison.
Around Europe, Germany's DAX was down 0.17 per cent after earlier hitting a fresh year-high of 3,430.76. Traders saw heavy resistance for the German benchmark index at 3,450.
In Paris, the CAC-40 stood 0.9 per cent down at 3,150 by 1555 GMT.
Britain's Marks and Spencer reported a return to growth in quarterly clothing sales but investors punished shares in the store group as the recovery was not as strong as hoped. Shares in M&S, which had risen over 10 per cent during the last month, fell as much as 7.5 per cent.
M&S' performance failed to win over investors who had expected more and the stock fall soured sentiment among other retailers.
Electrical retailer Dixons closed 3.2 per cent down and clothing group Next shed 0.73 per cent.
Shares in Swiss drugmaker Roche fell 2.9 per cent after US regulators issued a warning letter to Roche Diagnostics Corp. regarding what they said were "serious problems" in the manufacturing of insulin pumps at one of its plants in Switzerland.
ASML, the Dutch chip equipment maker, reported a second-quarter bigger-than expected net loss and its shares tumbled 4.7 per cent.