The European markets fell for the third day on Tuesday, as banking stocks slipped and some economic data gave mixed signals for economic recovery.

The U.S. Commerce Department said in its report that housing starts rose 17.2% to an annual rate of 532,000 units in May from the revised April estimate of 454,000. Economists had expected starts to rise to 485,000 from the 458,000 originally reported for the previous month.

However, a report released by the U.S. Federal Reserve showed that the country's industrial production fell 1.1% in May following a revised 0.7% decrease in April. Economists had been expecting production to fall 1.0% compared to the 0.5% drop originally reported for the previous month.

Meanwhile, the ZEW Indicator of Economic Sentiment for Germany stood at 44.8 points in June, up from 31.1 points in May. The latest reading, which is the highest since May 2006, came much better than the 34 points expected by economists.

Crude for July delivery rose $0.76 to $71.38 a barrel on the New York Mercantile Exchange, by the time the European markets closed, after the U.S. dollar slumped.

The FTSEurofirst 300 index of pan-European blue chips closed 0.01% lower at 863.22 points, while the narrower DJ Stoxx 50 index fell 0.17% to 2,132.91 points.

Around Europe, France's CAC 40 index fell 0.17% to 3,213.95, while the U.K.'s FTSE 100 index rose 0.06% to 4,328.57 and Germany's DAX index advanced 0.02% to 4,890.72.

National Bank of Greece tumbled 10.7% after Greece's largest bank announced plans for a ?1.25 billion rights offer. EFG Eurobank Ergasias, Greece's second biggest lender, dropped 8.6%.

UBS, Switzerland's largest bank, slipped 4.1% after Moody's put UBS' long-term debt and deposit ratings on review for possible downgrade.

France's BNP Paribas and Societe Generale fell 2.3% and 3.3%, respectively, while Italy's UniCredit lost 2.4%.

On the other hand, Tesco, the world's third largest retailer, rose 1.5% after the company reported first quarter sales growth that matched analyst estimates.

BT Group, Britain's largest phone company, climbed 8% after Morgan Stanley upgraded the stock to overweight from equal weight.

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