European shares closed lower for a third straight day on Wednesday, with financial stocks suffering the most, as investors took profits after a strong run in recent months.
The FTSEurofirst 300 index of top European shares fell 0.4 percent to close at 950.41 points. The benchmark index is still up more than 47 percent from the record low it hit on March 9, and the DJ Stoxx Banking Index is up more than 154 percent in that time.
Shares have risen with growing investor confidence in economic recovery. The euro zone's two biggest economies, France and Germany, have both come out of recession.
But some analysts say there is insufficient evidence of recovery to justify the rally and worry about what will happen when government stimulus measures are wound down.
Banking stocks were among the worst hit after a sharp sell-off in the United States on Tuesday and in Japan on Wednesday.
Banco Santander , Barclays , Credit Suisse , Lloyds , Societe Generale , UBS and UniCredit fell between 1.5 and 6.2 percent.
Part of this is just natural profit taking, said Philip Lawlor, strategist at Nomura, in London.
One catalyst for that has been China, he added, referring to a 21.8 percent slide for the Shanghai Composite Index in August.
We have to wait now for companies to report third-quarter numbers. We're in a vacuum, so it's not surprising to see a dip.
G20 countries still think it is too early to remove the huge fiscal and monetary stimulus thrown at their economies but any exit strategies should be executed in a coordinated way, a UK government source said on Wednesday. [ID:nL2626020]
Data showed the euro zone economy contracted only marginally in the second quarter, dragged down by a plunge in inventories and private investment. [ID:nBRQ007497]
Data from the United States was mixed. The world's biggest economy lost fewer private sector jobs in August than in the prior month while companies also planned fewer layoffs, suggesting modest improvement in the beleaguered labour market.
Tentative signs of recovery were also evident in data showing U.S. factories saw an increase in new orders in July for the fourth straight month, though the rise was smaller than economists had expected. [ID:nN02429512]
Insurers also lost ground, with Aegon , AXA , Allianz and Swiss Re falling between 1.9 and 4.8 percent.
Legal & General closed 8.7 percent lower, partly as a result of going ex-dividend.
Mining shares suffered as copper fell to a near two-week low on worries prices in industrial metals have overheated.
BHP Billiton , Anglo American , Antofagasta , Rio Tinto , Xstrata and Eurasian Natural Resources fell 1.6-3.3 percent.
A.P. Moller-Maersk fell 8.1 percent after the Danish shipping and oil group said it aims to tap investors for close to $1.8 billion through a share placement to boost its financial flexibility. [ID:nL2424408]
Alcatel-Lucent fell 7.3 percent after the company said it was raising the initial amount of its convertible bond issue to 870 million euros.
Heavyweight BP limited the index's losses after it made a giant oil discovery in the Gulf of Mexico, reaffirming the area's importance to Western oil majors. Its shares rose 4.2 percent. [ID:nL2530648]
Across Europe, Britain's FTSE 100 closed 0.04 percent lower; Germany's DAX and France's CAC-40 were down 0.1 and 0.3 percent respectively.