Disappointing results from telecom equipment heavyweight Ericsson (ERICb.ST) and profit-taking after a recent strong run helped send European shares lower around midday on Thursday.

At 1050 GMT, the FTSEurofirst 300 .FTEU3 index of top European shares was down 1.3 percent at 1,012.61 points after ending just shy of a one-year closing high in the previous session.

The European benchmark index is up more than 56 percent from its lifetime low of March 9, as investors have become more confident on the prospects of economic recovery and most third-quarter earnings have beaten forecasts.

(But) Ericsson was a shocker, said David Buik, senior partner at BGC Partners, in London. And what we're seeing is that the quality of some of the U.S. earnings is based on cost-cutting rather than any growth in sales.

Those people who believe that we're on our way to the moon delude themselves. This is a long hard struggle. We've been waiting for weeks for some kind of a pullback after the rally. 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. Rival Alcatel-Lucent (ALUA.PA) fell 2.4 percent.

Banks took the most points off the index after some of their U.S. counterparts fell late on Wednesday. Wells Fargo (WFC.N) ended 5.1 percent lower despite its results beating forecasts. Credit Suisse (CSGN.VX) was down 2.8 percent despite posting forecast-beating results, hurt by concerns over the lender's ability to maintain its strong performance.

BNP Paribas (BNPP.PA), Banco Santander (SAN.MC), HSBC (HSBA.L), UBS (UBSN.VX) and UniCredit (CRDI.MI) fell between 1.6 and 2.8 percent.

Across Europe, Britain's FTSE 100 .FTSE, Germany's DAX .GDAXI and France's CAC-40 .FCHI were between 1.5 and 1.8 percent lower.


Energy companies fell as oil prices slipped back from one-year highs, though they were still above $80 a barrel, as the dollar enjoyed a slight bounce.

Total (TOTF.PA), BP (BP.L) and Royal Dutch Shell (RDSa.L) fell between 1.8 and 2.2 percent.

Miners slipped, as the price of copper and other metals fell. Anglo American (AAL.L), Antofagasta (ANTO.L), BHP Billiton (BLT.L), and Xstrata (XTA.L) fell between 1.1 and 2.3 percent.

Bucking the trend, Nestle SA (NESN.VX) was up 1.8 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 (PERP.PA) rose 2.2 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.

UK pubs groups soared after Britain's consumer regulator gave the all-clear for leased pub operators to continue with an arrangement that forces tenants to take beer supplies only from their landlords, boosting pub company shares. 

Enterprise Inns (ETI.L) and Punch Taverns (PUB.L) were up 17.4 and 13.9 percent, respectively.

Before the U.S. markets open, investors will focus on weekly jobless claims and earnings from companies such as AT&T (T.N) and McDonald's Corp (MCD.N).

Futures for the Dow Jones DJc1, S&P 500 SPc1 and Nasdaq NDc1 were down between 0.1 and 0.3 percent.