European shares slipped on Wednesday, after closing at their highest level in more than a year, as London's last-ditch Brexit talks with Brussels kept investors apprehensive about making brisk decisions. The pan-European STOXX 600 index was down 0.3 per cent, after closing at its highest level since May 2018.

London-listed shares of Rio Tinto were among the biggest decliners on the STOXX 600, after the miner said its iron ore shipments rose 5 per cent. But it cut its bauxite and alumina production forecast for the year. Rio's shares also took a hit from China iron ore plunging to a six-week low following a weak demand outlook.

The wider European mining sector was down 1.3 per cent, while the financial services and retail sectors shed more than 1 per cent on declines in British stocks.

Brexit negotiations will resume in Brussels on Wednesday morning after “constructive” negotiations went into the night on Tuesday, but time is running out to put the deal to vote at an European Summit that starts Thursday. Any deal will also need approval from the British parliament. “(The market is) expecting the UK and EU to agree to a deal, but we still don't know whether it's a deal that will get through parliament,” said Jonathan Bell, Chief Investment Officer at Stanhope Capital.

European stock markets logged strong gains over the past week following unexpected breakthroughs in Brexit negotiations with Ireland. The benchmark index has risen more than 2 per cent, while German stocks, which have large exports to Britain, rose nearly 4 per cent.

Britain's domestically-focused midcaps, which rallied 5 per cent in the past three sessions to its highest level in a year, was down 1 per cent on Wednesday. In a bright spot, Volkswagen shares rose 1 per cent as industry data showed European car registrations rose 14.4 per cent in September.

Investor focus shifts now to Europe's earnings season, which gets underway in earnest next week. Analysts expect an earnings recession to deepen as companies struggle with uncertainties around Brexit, a protracted US-China trade spat and Germany's manufacturing recession.

STOXX 600 companies are now expected to report a drop of nearly 3.7 per cent in third-quarter earnings, worse than the 3 per cent fall expected a week ago, I/B/E/S data from Refinitiv showed. Dutch semiconductor equipment maker ASML slipped 0.3 per cent despite reporting higher-than-expected quarterly profit and bookings.

Keeping losses in check for the benchmark index were shares of Roche, which rose 0.9 per cent as the Swiss drugmaker boosted its 2019 sales outlook for a third time, and said it expects to finish its takeover of Spark Therapeutics this year. Its shares boosted the healthcare sector by 0.4 per cent.

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