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Europe shares close lower as US earnings disappoint

European equities closed lower on Tuesday, with markets still cautious about when the U.S. Federal Reserve might scale back its stimulus program and disappointing corporate results weighing on Wall Street.

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The FTSEurofirst 300 index closed 0.6 percent lower at 1,296.4 points, with all key European bourses and sectors posting losses. Asian equity markets were mostly lower on Tuesday, while U.S. stocks were near-unchanged after a mixed bag of earnings.

Home Depot, the world's largest home-improvement retailer, beat profit and sales expectations for the third quarter, but Campbell Soup's results fell short of estimates.

"Holiday sales will be the major fundamental topic for investors this year. So far, investors are getting a very mixed picture on the health of the consumer in the wake of the partial federal shutdown and uncertainties related to the implementation of the healthcare exchanges," Fred Dickson, chief market strategist at Davidson Companies, noted in emailed commentary.

Taper concerns continue

Comments from New York Fed President William Dudley on Monday also weighed on sentiment. Dudley was optimistic on the economic recovery, which is usually taken as a sign that the U.S. central bank could reduce its stimulus program soon.

Markets will keep their ears open for further hints of tapering when the Fed Chairman Ben Bernanke gives a scheduled speech in Washington on Tuesday night ahead of Wednesday's release of minutes from the Federal Open Market Committee's October meeting.

German economic sentiment data came in better-than-expected on Tuesday. The closely watched ZEW economic indicator survey for November showed an uptick to 54.6 from 52.8 last month. This beat estimates in a Reuters poll of 54.0. Stocks were unchanged after the news.

"The German economy should cruise along rather smoothly to the end of the year," Carsten Brzeski, a senior economist at ING said in a research note after the data.

Easyjet shares rise

In stocks news, shares of airline Easyjet closed around 7.1 percent higher on Tuesday after it reported full-year pre-tax profit of £478 million ($769 million), a 50.9 percent increase from the same period last year and said it would return £175 million to shareholders in the form of a special dividend.

(Read More: EasyJet pretax profit up 51%, sees more competition)

Dutch food and chemicals firm DSM saw its shares close roughly 3.1 percent higher after it said on Tuesday that it was spinning off its pharma business with private equity firm JLL, in a $2.6 billion deal.

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