European shares fell back on Thursday as energy and banking stocks dragged broader indices, while retail was a bright spot after an upbeat set of results from Britain's Next.
The pan-European STOXX 600 slid 0.3 percent as cyclical sectors weighed, while euro zone blue chips fell 0.6 per cent.
Britain's FTSE 100 slipped 0.2 per cent as investors awaited the Bank of England's monetary policy decision. German stocks underperformed peers, down 0.4 per cent as Siemens and Beiersdorf fell after results.
“German equities have been strongly impacted by the euro over the course of the last few weeks,” said Pierre Bose, head of European strategy at Credit Suisse.
“We have also had some negative sector headlines on autos and industrials which have definitely weighed.”
The DAX has fallen more than 6 per cent from its record high hit on June 19.
“Earnings momentum and revisions have not been very strong in Germany but they are no worse than the middle of the pack, so the discount you are seeing relative to the rest of the euro zone is not fully merited,” Bose added.
Energy stocks fell 0.9 per cent, weighed by Finnish refiner Neste which dropped 7.4 per cent after second quarter profit missed expectations. Norwegian oil services firm TGS also fell 5.3 per cent, with traders citing slightly lighter revenues for the second quarter.
Oil and gas sector is the worst performer in Europe this year and the only one trading in the red.
While banks overall fell on the day, shares in Italy's largest bank Unicredit bucked the trend, climbing 4.6 per cent after reporting forecast-beating profits for the second quarter.
Unicredit helped Italy's blue-chips outperform, up 0.2 per cent. Shares in Tenaris meanwhile were suspended after sharply dropping at the open, after earnings were released overnight. Credit Agricole shares fell 0.5 per cent despite the bank's profits beating estimates.
Some traders cited concerns over one-off items flattering the earnings numbers.
German industrial giant Siemens fell 3.1 per cent to the bottom of the DAX after it delayed its healthcare IPO and earnings missed estimates.
French stationery supplier Bic jumped more than 6 per cent to the top of France's SBF 120 index after reporting sales up 3 per cent in the first half.
Retailer Next jumped 9 per cent, helping retail stocks outperform, after the British firm returned to sales growth in the second quarter, boosted by improved product ranges and a better online offer.
Deutsche Telekom was a rare gainer on the DAX, up 0.9 per cent after its profit beat.
Exane strategists upgraded their view on the telecoms sector to 'overweight', saying after underperformance this year the second-quarter earnings season has been better.
“We see a favourable top-down environment for outperformance,” they wrote.
Of the 56 per cent of MSCI Europe companies having reported earnings for the quarter, 62 per cent have either beaten or met estimates.
Basic materials, energy and financials were leading the sector table in terms of forecast-beating results, while utilities and industrials have seen the most forecast misses.