By Sarah Turner
LONDON -- European shares ended in negative territory Tuesday, with investors unwilling to build on multimonth highs amid fresh reminders of the fragility of the economic outlook.
The pan-European Dow Jones Stoxx 600 Index eased 1% to close at 241.94, although it remains up 22% year-to-date. The U.K. FTSE 100 Index declined 1.1% to 5154.15, while the German DAX Index lost 1.2% to 5714.31 and the French CAC-40 Index fell 1.2% to 3801.39.
Markets were weighed down by economic data that underscored warnings that recoveries in Europe and the U.K. could be slow and bumpy. Economic expectations in Germany fell in October for the first time in four months, while Britain's annual consumer price inflation slumped to its weakest rate in seven years in September.
Construction firms and auto makers, which are leveraged to economic growth, declined on Tuesday. Daimler /zigman2/quotes/205332368/delayed DE:DAI -1.79% shares fell 0.9%, while Saint-Gobain /zigman2/quotes/201813666/delayed FR:SGO +0.21% lost 3%.
Banks and insurance firms also pulled back, with Crédit Agricole /zigman2/quotes/209264506/delayed FR:ACA -0.37% down 2.8% and Deutsche Postbank declining 2.8%.
Banks have seen sharp gains since March, as investors became willing to take on more risk amid signs that the economic backdrop was improving.
Richard Batty, investment director at Standard Life Investments, said inflation will remain low for years and equities will probably be volatile against a backdrop of a moderate economic recovery by historical standards. "Markets are pricing in a strong recovery," he said. "They may have got a bit ahead of themselves."
Mr. Batty said that investors are "now relying on earnings growth and headline sales coming through." But the picture on corporate earnings won't come clearer for a few weeks and Tuesday was quiet in terms of European corporate updates.
Of the few companies releasing results, Whitbread rose 0.5% after the hotel and restaurant operator posted an 82% rise in net profit for the six months to Aug. 27 to £73.6 million ($116.4 million). Revenue grew 3% to £703.3 million as declining revenue at its hotels and restaurants business was partly offset by a 20% rise in sales at its Costa Coffee chain.
Mobile-phone maker Nokia, which will release third-quarter earnings on Thursday, fell 1.3%.
U.K. sugar producer Tate & Lyle /zigman2/quotes/205109332/delayed UK:TATE -0.36% gained 5.3% after it was upgraded to "outperform" from "neutral" at Credit Suisse. The investment bank said it sees improved trading for the group.
British retailer Marks & Spencerfell 4.3% as the company hosted an investor day, featuring presentations by senior managers.
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