European shares dipped on Tuesday after the previous session's sharp gains, dragged lower by commodity stocks, but financials offered support after BNP Paribas raised capital to shake off government influence.
Financials were standout gainers, with BNP Paribas (BNPP.PA) up 2.6 percent as investors welcomed its move to launch a 4.3 billion euros ($6.3 billion) capital increase and pay back French state aid.
But heavyweight oil producers came under pressure as oil prices CLc1 fell ahead of weekly U.S. crude inventory data, pushing the FTSEurofirst 300 .FTEU3 of top European shares lower.
By 1048 GMT, the pan-European index was down 0.1 percent at 1,000.41 points after rallying 1.8 percent in the previous session. It has jumped 55 percent since hitting a low in early March and is up nearly 18 percent this quarter, on track to post its best quarterly rise in almost a decade.
We are running towards the end of the year. If fund managers miss the market, they are going to want to use any pullback to get in, said Philip Lawlor, chief portfolio strategist at Nomura, in London.
More importantly, if you have done well, you want to stay fully invested, he said.
Oil majors BP (BP.L), Royal Dutch Shell (RDSa.AS), Total (TOTF.PA) and Repsol (REP.MC) dropped 0.3-1.3 percent.
Miners were also out of favour as metal prices eased. BHP Billiton (BLT.L), Rio Tinto (RIO.L), Anglo American (AAL.L), Xstrata (XTA.L) and Kazakhmys (KAZ.L) were down 0.9-2.2 percent.
Life insurer Legal & General (LGEN.L) surged 4.6 percent, building on a 5.2 percent rise on Monday, on more bid talk following a weekend press report that it has prepared a defence document against a potential bid from takeover vehicle Resolution RS.L.
Within the financial sector, Lloyds Banking Group (LLOY.L), Royal Bank of Scotland (RBS.L), Barclays (BARC.L) and Societe Generale (SOGN.PA) were up 1.1-2.6 percent.
The DJ Stoxx European banking index .SX7P has rallied 173 percent from a March low.
A number of banks are aiming to repay governments for their financial support during the credit crisis, as they want to avoid government restrictions on lending, pay and dividends.
Investors will keep an eye on the September consumer confidence report from the United States and S&P/Case-Shiller house prices for July later in the day.
Euro zone economic sentiment improved more than expected in September thanks to a sharp rise in optimism among consumers and in the services sector, and inflation expectations rebounded from August's all-time low.
German economic growth probably accelerated to 0.7 percent on the quarter in the July-September period, the DIW economic institute forecast. In the UK, the economy shrank less than previously estimated in the second quarter of this year, due to better-than-expected construction industry performance, data showed.
Across Europe, Britain's FTSE 100 .FTSE slipped 0.5 percent, Germany's DAX .GDAXI lost 0.6 percent and France's CAC 40 .FCHI eased 0.5 percent.
European planemaker Airbus (EAD.PA) slipped 1 percent after it confirmed it had cut its 2009 delivery target for A380s by one aircraft to 13 planes and said it was maintaining its delivery forecast for 2010.
Salzgitter (SZGG.DE) shed 2.8 percent. The second-biggest steelmaker in Germany said it was issuing a seven-year convertible bond. Spain's FCC (FCC.MC) soared 6.7 percent after Deutsche Bank upgraded its rating to buy from hold, citing the builder's exposure to a possible early construction recovery in Spain and Eastern Europe.
Also on the upside, Compass Group (CPG.L) advanced 2.8 percent after the world's largest caterer said it expected to grow full-year earnings per share by 14 percent on new business wins, cost cuts and a weak British pound.