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London - European equities fell on Tuesday following some weaker-than-expected corporate updates, with paper maker UPM-Kymmene slipping after results while a new share issue hit Commerzbank.
Commerzbank dropped 4.3% after the German bank launched a share sale to raise €1.4bn from institutional investors to bolster its capital.
UPM-Kymmene also slumped 8.5%, the worst performer on the pan-European FTSEurofirst 300 index, after its quarterly core profit missed expectations.
The FTSEurofirst 300 index was down 1% at 1 626.12 points by the middle of the trading session, giving up gains of a similar size made in the previous session.
Nevertheless, the FTSEurofirst remains up nearly 20% since the start of 2015, as new economic stimulus measures from the European Central Bank (ECB) have pushed investors over to the better returns available from stocks compared to bonds and cash, whose returns have been hit by record low interest rates.
"We have seen some mixed earnings reports today, however disappointing results from companies such as UPM-Kymmene have eclipsed some positive results," said Christian Stocker, equity strategist at UniCredit.
"The broader stocks market's recent uptrend remains intact, but we need to see a further improvement in company earnings for the trend to remain firmly in place in the coming weeks."
Greek market rises
Investors also traded cautiously ahead of the start of the Federal Reserve's two-day policy meeting on Tuesday. Analysts expect recent soft US data will nudge the US central bank towards a dovish stance on monetary policy, while investors will scrutinise statements for hints about the timing of a rate hike.
Geberit, which makes toilet flushing systems, dropped 6.3% after reporting a fall in first-quarter net profit.
However, oil major BP bucked the trend and rose 1.3% after reporting higher than expected profits. BP also maintained its dividend at 10 cents per share.
Across Europe, Germany's DAX retreated 0.7% and France's CAC was down 1%, although the DAX remains not too far off record highs.
Greece's ATG index extended the previous session's gains of 4.4% to rise by 1.1% after Greek Prime Minister Alexis Tsipras on Monday reshuffled his team handling talks with European and IMF lenders.
Nevertheless, some traders remained wary about Greece, and the risks that a lack of progress on finding solutions for Greece's debt problems could hit European stock markets.
"There is plenty of potential for downside here. I'd be looking to sell on rallies," said Berkeley Futures' associate director Richard Griffiths.
