European stocks end July on back foot
Weakness among tobacco stocks and some broker downgrades weighed on European shares, sending them lower on the final trading day of July as analysts dissected what was beginning to look like an "underwhelming" earnings season.
The pan-European STOXX 600 index was down 0.1pc while Eurozone stocks and blue chips fell 0.3 to 0.4pc. Britain's commodity-heavy FTSE 100 index held on to 0.1pc gains while France's CAC 40 underperformed, hitting its lowest in three months.
Stocks retreated as financials became a drag on the main European indexes. HSBC ended 1.9pc higher, however, after posting a forecast-beating 5pc rise in first half pretax profit and announced its third buyback in a year.
As the European second-quarter earnings season gathers pace, around 46pc of MSCI Europe firms have reported results, 59pc of which have either met or beaten analysts' expectations, according to Thomson Reuters data.
This figure is slightly lower for Eurozone companies. Just over half of them have met or beaten expectations.
"Compared to the record-breaking Q1 earnings season, Q2 results thus far appear underwhelming," said Barclays strategists.
"Reflecting this, the median stock has performed only in line with the markets on results day," they said, adding that companies which missed expectations were harshly punished by investors.
The STOXX 600 ended the month 0.4pc lower, hampered in July by a stronger euro which has weighed on Eurozone firms, especially exporters.
It was the second consecutive month of losses for the pan-European index.
Consumer goods were the top drag on the benchmark yesterday.