Europe shares close down over US taper fears

European shares closed down on Tuesday, on renewed fears in the U.S. that the Federal Reserve might start tapering its massive stimulus program in September.

The pan-European FTSEurofirst 300 index provisionally closed down 0.4 percent, despite a report published by the British Retail Consortium on Tuesday which showed British retailers enjoyed their best July in six years.

The FTSE 100 closed down roughly 0.3 percent while the German DAX closed approximately 1.3 percent lower.

Across the Atlantic, U.S. stocks traded lower, with the Dow and S&P 500 extending their losses from the previous session. Investors grew more concerned the Fed might start tapering in September on the news that the U.S. trade deficit fell to $34.2 billion in June, its lowest level in more than 3-1/2 years.

Furthermore, Atlanta Fed President Lockhart said on Tuesday that tapering could begin at any of the three remaining Federal Open Market Committee (FOMC) meetings this year.

In Europe, Italy's second quarter GDP numbers showed the economy contracted for the eighth consecutive quarter in the second quarter of 2013, but shrank less than analysts expected, offering hope that the country is slowly emerging from recession. The FTSE MIB closed provisionally down 0.6 percent.


In stock news, HSBC, the biggest faller on the FTSE on Monday after a disappointing set of results, closed provisionally down 0.9 percent lower after several brokers cut their ratings and price targets on the stock.

Standard Chartered took a $1 billion hit on the value of its Korean business on Tuesday, pulling its first half profits down nearly 16 percent from a year ago. However, the Asia-focused bank closed up roughly 2.9 percent, as shares were lifted by a robust outlook and exposure to growth in Africa and India.

There was good news for Legal & General too, which delivered excellent growth in operational and net cash generation, operating profit and earnings per share in the first half-year. Operating profit increased by 10 percent to £571 million. Shares closed up approximately 2.2 percent higher after the results.

In France, Credit Agricole reported a more-than-12-fold gain in quarterly profit. Net income in the three months ended June 30 rose to 696 million euros ($922 million) from 56 million a year earlier, exceeding the 514 million average of estimates in a Thomson Reuters poll of analysts. Shares closed down roughly 0.9 percent.

Shares in world's largest silver miner Fresnillo led the FTSE lower, after the firm reported a steep fall in half-year profit and made a deep cut to its dividend. The Mexico-based company cut its dividend by 68 per cent to $0.049. Shares closed provisionally down 10.84 percent.