European shares fall, Asia markets mixed

Trading was subdued as U.S. financial markets were closed for the July Fourth holiday.

In Europe, Britain's FTSE 100 closed down 1.16 percent to 5,412.80, German's DAX fell 1.28 percent to 6,272.21, and France's CAC-40 slid 1.80 percent to 4,266.00.

In Asia, Indonesia's main index rebounded after selling off nearly 4 percent the prior session. Hong Kong and Australia equities also were higher.

With stocks hit hard recently, some Asian investors were returning to the market to take advantage of lower prices. Others who bet on falling prices were starting to take profits, further supporting prices.

"Investors are still bearish, we've been down a lot in the past few weeks. But even those bears are a bit hesitant on selling at this level," said Y.K. Chan, fund manager at Phillip Capital Management in Hong Kong.

Elsewhere, markets in Japan, mainland China, South Korea and Malaysia lost ground.

The current market climate in Europe is "a bit morose anyway" because of the high oil price and the credit crunch, said Andrew Bell, head of research at Rensburg Sheppards, an investment management company in Britain.

Unlike in the first quarter of the year when "people were genuinely panicking because they didn't feel confident in the banking system," Bell said that "fear of the whole system unravelling" wasn't around today.

"But that doesn't stop the markets falling because company earnings are being squeezed by rising costs, weaker economic growth and tighter credit," he said.