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[LONDON] European shares ended lower on Wednesday, surrendering early gains as a rally in the euro and a fall on Wall Street prompted investors to trim their trading positions.
The FTSEurofirst 300 index of top shares finished 0.5 per cent weaker at 1,547.72 points after rising as high as 1,562.18 earlier in the session following strong euro zone services data and some encouraging corporate results. "The euro is strengthening and that has taken some of the earlier tailwinds away from the market," Gerhard Schwarz, head of equity strategy at Baader Bank, said, noting a stronger currency was negative for Europe's export-oriented companies.
The euro climbed to a two-month high against the dollar, helped by business surveys pointing to a solid pick-up in euro zone economic activity and underpinned by German 10-year Bund yields that hit their highest this year.
The market sell-off gathered pace after US stocks fell on disappointing data, including weaker-than-expected private jobs numbers, raising concerns about the potential for an economic rebound from a first-quarter slump.
Europe's cyclical sectors were among the worst performers, with real estate, automobile, construction and material and travel and leisure falling 1.0 to 2.3 per cent.
Some encouraging company results limited losses. Danish wind turbine maker Vestas Wind, mobile phone operator Telenor and AB InBev, the world's largest brewer, rose 1.1 to 3.5 per cent.
Despite a largely positive earnings season, in which 63 per cent of STOXX Europe 600 companies to have reported so far have met or beaten consensus forecasts, European shares have given back some of the hefty gains accumulated since the start of the year.
The FTSEurofirst is still up nearly 14 per cent this year, in a surge largely fuelled by the European Central Bank's asset-purchase programme and improved euro zone data.
Among other sharp individual movers, Norwegian non-life insurer Gjensidige fell 3.7 per cent after reporting first quarter pretax earnings below expectations.
French bank Societe Generale dropped 2.3 per cent after its results, despite posting a fivefold increase in first quarter net income. "We believe that a lack of progress on capital ratio and a mixed set of results, with notable weakness from Russia..., suggests that the stock lacks a near-term catalyst," Citi analyst Kinner Lakhani said.
British supermarket Sainsbury's fell 3.2 per cent after posting its first annual loss in a decade, hurt by property writedowns, deflation and an industry price war, and warned investors not to expect trading conditions to improve any time soon.