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London - European shares slipped on Monday after two straight session of gains, led lower by financials, as the latest figures showing Japan's economic growth slowed sharply in April-June raised concerns about the global recovery.
Japan's quarterly gross domestic product growth of 0.1% translates to annualised expansion of 0.4%, well below the median market forecast of 2.3% and the United States' 2.4% annualised growth in the same quarter.
Analysts see more weakness in the Japanese economy ahead. The figures came just days after a darker assessment of the US economy by the Federal Reserve.
At 09:02 GMT, the FTSEurofirst 300 index of top European shares was down 0.6%at 1 038.92 points after rising to a high of 1 051.24 earlier in the session. The market remained choppy because of thin volumes in the holiday season.
The volume on the European index was 14% of its 90-day daily average.
"What has been driving sentiment for a little while now has been this concern about the loss of momentum in the global recovery. The GDP figures out of Japan this morning clearly didn't help," said Mike Lenhoff, chief strategist at Brewin Dolphin.
"For the balance of the month, we are probably not going to go anywhere. The earnings season was very good but it's behind us now."
Financial stocks were among the top losers, with the STOXX Europe 600 banking index falling 1.2% on worries slower economic growth will hurt banking operations. Standard Chartered , Royal Bank of Scotland, BNP Paribas and Credit Agricole fell 0.7% to 1.9%.
Oils down, Hochtief jumps
Energy shares also lost ground on concerns that energy demand in the US will suffer. BP, Royal Dutch Shell, BG Group, Tullow Oil, Repsol and Total shed 0.4% to 2.1%.
"There is nothing to cheer about. Economic figures, certainly in the United States, are really disappointing and pointing towards going more and more close to a double dip," said Koen De Leus, economist at KBC Securities.
"This time, it doesn't hurt to be a little bit cautious."
Investors wait for more macroeconomic numbers from the US this week, including industrial production, housing starts and inflation, for short-term market direction.
Miners also tracked the broader market weakness. The STOXX Europe basic resources index fell 0.3%, while steel giant Arcelor Mittal, Lonmin and Rio Tinto fell 0.1% to 0.6%.
But some analysts were positive on the sector's outlook.
"While the market appears to be struggling to see beyond the near-term slowing of China and ex China, we believe evidence that China has bottomed will be the next catalyst for the outperformance of the miners," Credit Suisse said in a note.
Across Europe, the FTSE 100, Germany's DAX and France's CAC 40 fell 0.4% to 0.9%.
On the positive side, Hochtief, Germany's biggest construction company, jumped 5.4% after it raised its 2010 outlook for new orders and order backlog after receiving several large contracts in Australia in the second quarter.
So far this earnings period, some 75% of results from Standard & Poor's 500 companies have beaten earnings forecast, according to Thomson Reuters estimates.
The Euro STOXX 50, the eurozone's blue chip index, was down 0.8% at 2 686.56 points. The index might find support at 2,669 - the 38.2% retracement of a fall from a high in April to a low in May.
