European shares fell by midday on Tuesday in choppy trade as declines in bank stocks offset gains in defensives led higher by record earnings from British retailer Tesco.
At 1117 GMT, the FTSEurofirst 300 index of top European shares was down 0.75 percent at 780.37 point, having fluctuated between 0.73 percent lower and 0.8 percent higher.
The index fell 3.5 percent on Monday after results from Bank of America sparked renewed concerns about the banking sector.
Banks, the sector at the centre of a credit crisis that knocked 45 percent off European stocks last year, were the top loser for the second day in a row on Tuesday.
Societe Generale fell nearly 7 percent while Lloyds lost 3 percent and UniCredit fell 2.8 percent.
"The market's had a big sell off yesterday globally and I think what we're seeing is just a bit of consolidation," chief strategist at Brewin Dolphin Securities, Mike Lenhoff, said.
"It hasn't quite yet picked up on which sectors it really wants to push at the moment so it's still floundering a bit," Lenhof added.
Tesco rose 5.8 percent after the world's No.3 retailer showed its resilience to the economic downturn, posting a 10 percent rise in underlying annual profit to 3.1 billion pounds ($4.6 billion), a record for a British retailer.
Across Europe, Britain's FTSE 100 fell 0.75 percent, while Germany's DAX and France's CAC-40 rose between 0.4 percent and 0.55 percent.
U.S. futures were 0.3 percent to 0.5 percent lower ahead of a big earnings day featuring results from Bank of New York Mellon — which cut its dividend after a profit fall — and Caterpillar.
DEFENSIVES GAIN
Sweden's central bank cut interest rates by 50 basis points to a new record low of 0.5 percent on to fight the country's worst recession since the 1940s. The Swedish stock index was up 0.3 percent.
Earlier, ZEW's monthly poll of economic sentiment rose to 13.0 from -3.5 in March — the first time since July 2007 that the headline index is in positive territory, showing signs the pace of the German economic downturn may be slowing.
Utilities and some drugmakers gained, with E.ON, GDF Suez and RWE up 1.5 percent to 3.3 percent and Roche up 2.1 percent after Bank of America-Merrill Lynch said the stock remains among its key picks.
Oils rose as crude futures steadied below $46 a barrel after a nearly 9 percent fall on Monday. Total and ENI rose 1 percent and 0.7 percent respectively.
Miners fell as metals prices slipped. Anglo American, BHP Billiton and Xstrata were down between 0.6 and 4.2 percent. Actelion, Europe's largest biotech company, rose 9.3 percent after it more than doubled profit in the first quarter, beating analysts' expectations, as demand for its top-selling drug Tracleer kept increasing strongly. Drugmaker AstraZeneca was 1 percent lower after being downgraded by Bank of America-Merrill Lynch.
