LONDON (AFP) – European equities sank Wednesday, despite upbeat earnings from banking groups Lloyds, Societe Generale and Standard Chartered, as investors focused on poor US data that sparked concern about the recovery.
London's FTSE 100 index of leading shares dived 1.08 percent to 5,337.54 points in early afternoon deals, Frankfurt's DAX 30 shed 0.27 percent to 6,292.14 points and in Paris the CAC 40 index lost 0.53 percent to 3,728.82.
The Stoxx 50 index of top eurozone shares dipped 0.58 percent to 2,802.76 points.
Asian stock markets were also rattled after the United States on Tuesday released a raft of weak data on consumer spending, factory orders and pending home sales. Wall Street fell 0.36 percent as a result.
Later Wednesday, traders will also digest US employment data, ahead of crucial nonfarm payrolls figures that are due on Friday.
"There has been a concerted refocus of investors' gaze from company earnings to economic data over the last 24 hours," City Index analyst Joshua Raymond told AFP, adding that healthy bank earnings were now widely expected.
"Results from Lloyds, SocGen and Standard Chartered are all in line or better than some had expected, but it seems that outperforming bank earnings are now priced into the market," he said.
But British bank Standard Chartered saw its share price slide 6.25 percent to 1,783.5 pence, despite news that net profits rose 9.5 percent in the first half of 2010 at the emerging markets group.
The stock fell as investors fretted over the outlook for the group's consumer banking division.
On the upside, shares in Lloyds Banking Group rallied 3.06 percent to 74.12 pence, as investors applauded news that the state-rescued lender bounced back into pre-tax profit in the first half as bad debts fell sharply.
Pre-tax profit hit 1.6 billion pounds (1.9 billion euros, 2.5 billion dollars) in the six months to the end of June.
In Paris, Societe Generale shares climbed 0.58 percent to 45.66 euros, after posting second-quarter net profits that were more than triple last year at 1.084 billion euros (1.432 billion dollars).
The latest earnings come two days after bumper results from HSBC and BNP Paribas had boosted global stock markets.
"Following the exceptional numbers from HSBC, banking stocks have possibly gone a little too far as their share prices have suffered from some profit taking," said Angus Campbell, head of sales at trading firm Capital Spreads.
"Despite the round of bumper profits from banks, investors' appetite for risk seems to have come to a halt for now and we are seeing a sell off across the broader market."
He added: "Even though we're in the middle of an excellent earnings season there are serious headwinds for the global economy going forward with higher taxes and government austerity, things will remain tough."
Traders are meanwhile awaiting key interest rate decisions on Thursday from the Bank of England and the European Central Bank. Both are expected to keep their borrowing costs at record-low levels.