By Sarah Turner
European shares ended a choppy session in negative territory Tuesday, losing ground after U.S. housing data showed a smaller-than-expected rise in housing starts.
After wobbling between gains and losses for much of the session, the pan-European Dow Jones Stoxx 600 index closed 0.4% lower at 248.25. The index closed with a 1.5% gain on Monday, reaching a new 12-month high. Bulls said the backdrop was in place for further gains.
Shares of media group Pearson /zigman2/quotes/204954587/delayed UK:PSON +0.62% jumped 4.4% after it said it's trading ahead of expectations and raised its fiscal-year guidance following a better-than-expected performance from its education business.
In the U.S., Apple and Caterpillar reported forecast-beating earnings.
On a regional level, the U.K. FTSE 100 index declined 0.7% to close at 5243.40, the French CAC-40 index lost 0.5% to settle at 3871.45 and the German DAX fell 0.7% to end at 5811.77.
Data put a damper on enthusiasm Tuesday after U.S. wholesale prices fell a larger-than-expected 0.6% in September and new construction on U.S. housing units was essentially flat in the month at a seasonally adjusted annual rate of 590,000.
Companies that have been some of the best performers since investors started to take on more risk in March gave back some gains as investors locked in some profits, with construction-sector firms such as Saint Gobain /zigman2/quotes/201813666/delayed FR:SGO -1.29% , which generated 12% of its 2008 sales from North America, down 3.6%. Year-to-date, the stock is up 21.7%.
Barclays /zigman2/quotes/208409333/delayed UK:BARC +0.67% shares declined 4.8% at 364 pence after Qatar Holding sold some of its stake in the bank. It will remain a long-term shareholder in Barclays.
J Sainsbury /zigman2/quotes/206038250/delayed UK:SBRY +1.47% shares rose 5.4%. The U.K. grocer previously received a takeover bid from Qatar. In recent days there has been speculation of a fresh bid.
Elsewhere in the food retail sector, shares of Dutch supermarket giant Ahold declined 3.7% after it reported a 4.3% rise in third-quarter net sales. Ahold said it delivered volume growth in all markets but sales were impacted by deflation and customers trading down.
Technology shares were also weak, and Autonomy saw its shares drop 8.7%. The British software firm posted results that Deutsche Bank analysts described as "a mixed bag that will not allay bears' concerns."
Other notable movers included Adecco /zigman2/quotes/201694772/delayed CH:ADEN -6.18% , down 5.3%. The Swiss human-resources giant will pay $1.3 billion cash to buy business consultancy MPS Group.
SMA Solar Technology /zigman2/quotes/203471201/delayed DE:S92 -0.37% surged 16.9% after the German producer of photovoltaic inverters raised its sales outlook for 2009 and reported big increases in third-quarter sales and earnings.