Europe stocks fell 1.3 percent in early trade on Thursday, tracking losses on Wall Street, as worse-than-expected quarterly results from telecom gear firm Ericsson prompted investors to pocket some of their recent hefty gains.
Banks and miners — the key drivers behind the market's sharp seven-month recovery — lost ground, with BNP Paribas down 2.3 percent, UBS down 3 percent, BHP Billiton down 2.5 percent and Rio Tinto down 1.6 percent.
Credit Suisse was down 2.5 percent despite posting forecast-beating results, hurt by concerns over the lender's ability to keep up its strong pace.
At 0822 GMT, the FTSEurofirst 300 index of top European shares was down 1.3 percent at 1,012.75 points, after ending just shy of a one-year closing high in the previous session.
"The market was poised for a retreat, but I'm not expecting a major correction," said Christian Jimenez, president of Imene Investment partners, in Paris.
"At these levels, if all companies would report satisfying results, that would justify further gains on the market. Obviously, it's not the case."
Shares in Ericsson tumbled 7.8 percent after the world's biggest mobile networks maker reported weaker-than-expected quarterly core earnings and a drop in sales, hit by the global economic downturn.
"Topline is so much below our expectations that it will set the tone for the day. Ericsson says it's a tough market and this creates concerns over demand," said Swedbank analyst Hakan Wranne.
Shares of rivals Nokia were down 0.7 percent and Alcatel-Lucent were down 3 percent. The DJ STOXX tech index was down 2.4 percent, the biggest loser among Europe's sectors.
Around Europe, UK's FTSE 100 index was down 1.4 percent, Germany's DAX index down 1.6 percent, and France's CAC 40 down 1.5 percent.
Bucking the trend, Nestle SA was up 2.7 percent after the world's biggest food group said it was speeding up its share buyback programme as nine-month sales met forecasts and it kept its 2009 outlook unchanged.
Pernod Ricard rose 2.3 percent after the French spirits group met forecast with a 6.3 percent drop in first-quarter sales as emerging-market growth helped offset a slump in developed markets.
Swiss drugmaker Novartis gained 1.1 percent after it posted third-quarter net profit in line with forecast and said sales would grow faster than expected this year.
According to Thomson Reuters Proprietary Research, among the 27 companies in DJ STOXX 600 index that have already reported quarterly results, 15 beat estimates while 12 missed the estimates.
The FTSEurofirst 300 index, which is up 22 percent so far this year, has jumped 57 percent since reaching a record low in early March, a rally spurred by improving macro data and better-than-feared company profits.
But Europe's benchmark index is still down 38 percent from a 6-1/2 year high reached in mid 2007.
