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European shares surrendered early gains on Thursday after disappointing updates from companies like Deutsche Bank, Saint-Gobain and Barclays and a sharp drop in mining shares.
Deutsche Bank slipped 6 per cent after scrapping its dividend. Barclays was down 5.5 per cent following a 10-per cent drop in quarterly profits. Saint-Gobain fell 6 per cent after saying its results were hit by a contraction in France.
"Deutsche Bank is cutting its dividend, and the story for the banking sector as a whole is that they are going to struggle to get back to their earlier levels of profitability, given the amount of regulation going on," said Clairinvest fund manager Ion-Marc Valahu.
The pan-European FTSEurofirst 300 index was down 0.3 per cent at 1,480.12 points by 0939 GMT after rising to a high of 1,490.81 points earlier in the session.
European equities turned lower after metals prices extended losses following a rally in the dollar on the prospect of a US rate increase. That would make commodities more expensive for holders of other currencies.
The STOXX Europe 600 Basic Resources index fell 2.6 per cent, the top sectoral decliner in Europe. BHP Billiton, Rio Tinto and Anglo American fell 3.4 to 5.2 per cent.
The market initially shrugged off a choppy trading session in Asia after the US Federal Reserve left the door open to raising interest rates this year. Analysts said higher US rates might be bad for Asian markets but should support export-oriented European companies because of a stronger dollar.
Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets in Brussels, said that a stronger dollar hurt Asian markets because companies there have lot of dollar debt in the dollar and money might flow out of the region.
"But it's good for the profitability of European companies because the United States is an important market for Europe and a weaker euro against the dollar would further help exports. The Fed statement prompts people to believe that the U.S. economy is in a good shape," Gijsels said.
The Fed did not mention global conditions in its statement late on Wednesday. When it held policy steady last month, the central bank expressed concern that a slowing global economy could threaten the US outlook.
Nokia surged 10 per cent after reporting stronger-than-expected profits and announcing a new shareholder return plan.
Telecoms equipment maker Alcatel-Lucent rose 9 per cent even though it posted a net loss in the third quarter. The company said revenues from its core networking products rose and Nokia's plan to buy it was on track for the first quarter.
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