European shares closed lower in thin trade on Tuesday, with concerns continuing to surround the euro zone as German Chancellor Angela Merkel makes her first diplomatic visit to Athens since the start of the debt crisis in 2009.
Equities suffered a broad selloff as the International Monetary Fundcut its expectations for global growth and investors fretted that the U.S. earnings season, due to start later on Tuesday, may surprise negatively.
"Expectation for the earnings season is muted," Manish Singh, head of investment at Crossbridge Capital, said. "We need more confirmation (the U.S. economy is bottoming out) before according higher multiples to earnings."
The pan-European FTSEurofirst 300 index provisionally closed 0.5 percent lower at 1,095.32 points. Market participants said equities had potential to close the year higher than current levels, but in the near term, major stock indexes were likely to remain in a tight range.
Concerns about the prospect of a weak third quarter earnings season weighed on stocks on Tuesday, and prompted a sell-off in sectors such as household goods and telecoms . Cyclical sectors did better, with basic resources the only major sector index to close in the black.
Earnings season kicks off later on Tuesday with results from U.S. aluminum company Alcoa