EUROPEAN stock markets closed lower overnight, slipping back steadily in line with Wall Street as investors discounted strong results from chip giant Intel and JP Morgan, dealers said.
They said much has been made of upcoming US company results, and both Intel and JP Morgan posted better-than-expected headline figures, but a jittery market seemed to need more than that to establish any momentum.
Additionally, weak US inflation and consumer sentiment data pointed to the underlying fragility of the recovery and may have deterred buying interest before a long holiday weekend in the US, they said.
In London, the FTSE 100 index of leading shares closed down 0.78 per cent at 5455.37 points.
In Paris, the CAC 40 lost 1.53 per cent to 3,954.38 points, dropping back below the key 4000 points level for the first time this year, and in Frankfurt the DAX tumbled 1.89 per cent to 5875.97 points.
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Dealers in London said they thought initially the market would do well yesterday but momentum was soon lost as Wall Street fell quite sharply.
"Shares looked poised to continue their recovery but these hopes were dashed when US markets opened and promptly went into reverse," said David Jones, chief market strategist at IG Index.
"JP Morgan showed a more than fourfold increase in quarterly earnings ... but a tough time for its retail arm seems to have soured sentiment.
"Consumer sentiment data in the US also showed a less-than-expected rise and all of this seems to have convinced investors that there is no hurry to buy in ahead of the holiday weekend for US markets."
He said the market may make some modest gains over coming weeks but would need a really dramatic news lead to do better than that.
In New York, the blue-chip Dow Jones Industrial Average was down 1.02 per cent around 17.15 GMT (4.15am AEDT today), with the tech-heavy Nasdaq composite falling 1.33 per cent.
There was "a lack of enthusiasm over better-than-expected earnings from both Intel and JPMorgan," analysts at Briefing.com said in a note to clients.
Intel, the world's biggest computer chip maker, said net profit soared nearly nine-fold to $US2.3 billion ($A2.47 billion) in the last three months of 2009 on the back of a 28 per cent jump in revenue to $US10.6 billion ($A11.4 billion).
JPMorgan also posted a big jump in net profit to $US3.27 billion ($A3.5 billion), with revenues rising to $US25.2 billion ($A27.1 billion).
"The lack of buying interest following the reports underscores how the market's ... expectations have risen along with stock prices," which are up by about 60 per cent since March, said Patrick O'Hare of Briefing.com.
Elsewhere in Europe, Amsterdam fell 0.77 per cent, Brussels dropped 1.36 per cent, Madrid was off 1.29 per cent, Milan lost 1.40 per cent and Swiss stocks shed 0.78 per cent.
In Asian trade earlier yesterday, markets were generally firmer after Wall Street held up well overnight.
Tokyo gained 0.68 per cent at a fresh 15-month high, with tech stocks buoyed by Intel's results.
Chinese shares ended 0.27 per cent higher but Hong Kong continued weaker, falling 0.29 per cent while Sydney was flat.
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