European shares fell early on Wednesday after two days of gains, led lower by banks and oils and tracking U.S. markets hit by company profit warnings, though Rio Tinto jumped on its plans to cut jobs and spending.
At 0940 GMT, the FTSEurofirst 300 index of top European shares was down 0.6 percent at 854.61 points.
The index rose 1.4 percent on Tuesday, but it has lost more than 43 percent this year, battered by a credit crisis that has helped to push several major economies into recession.
Banks, the sector worst hit by the credit market ructions, were broadly weaker. HSBC was the top-weighted loser, down 1.4 percent. Banco Santander, Deutsche Bank and UBS were down between 1 and 1.9 percent. Analysts said markets were torn between reacting to poor news on the corporate front and robust policy responses.
"There's a two-way pull. Bad earnings news, the likes of FedEx, is baked in the cake now," said Bernard McAlinden, investment strategist at NCB Stockbrokers in Dublin.
"Markets have adjusted so much to an appalling view of the future, but we've never seen such a massive policy response before. And there's a lot of cash sitting on the sidelines."
Japan's Nikkei rose 3.2 percent on Wednesday on hopes governments worldwide will help out ailing industries and implement stimulus measures as they fight back against a deepening economic crisis.
The White House and U.S. Congressional Democrats neared agreement on a bailout for beleaguered U.S. auto makers, sending counterparts such as Honda Motor sharply higher.
Oils gave up early gains, despite crude prices rising more than 2 percent to $42.95 a barrel, recovering Tuesday's losses. Total, BP, Royal Dutch Shell, Repsol and Statoil fell between 0.7 and 3 percent. Data on U.S. oil inventories is due for release later in the session.
Across Europe, Germany's DAX rose 0.3 percent. Britain's FTSE 100 and France's CAC-40 were down 0.8 and 0.5 percent, respectively.
RIO LEADS MINER SURGE
Rio Tinto rose 10 percent after the company said it would cut 13 percent of its workforce, slash capital spending and boost asset sales as it battles a collapse in commodity markets.
The sector gained from rising prices of copper and other metals. Anglo American, Antofagasta, BHP Billiton, Vedanta Resources and Xstrata rose between 2.6 and 5.8 percent.
Lonmin lagged the sector, up just 0.7 percent, as it is set to lose its place in Britain's FTSE 100 in the quarterly reshuffle.
Oil services company John Wood Group rose 6.1 percent, though it, too, is set for demotion, having lost more than half its value in the last three months.
GlaxoSmithKline was down 1.6 percent after a study said long-term use of its Avandia product and Takeda's Actos doubles the risk of bone fractures in women with type 2 diabetes.
U.S. stocks fell on Tuesday as profit warnings from FedEx Corp and others unnerved investors after two days of big gains, while unprecedented demand for the safety of government securities showed fear remained the dominant force in the market.
The Dow Jones industrial average fell 2.7 percent, the Standard & Poor's 500 Index gave up 2.3 percent, and the Nasdaq Composite Index fell 1.6 percent.
