European equities fell in choppy trade on Thursday, with selling gaining momentum on technical grounds after a key index failed to break a significant resistance level and investors took profits from the previous session's rally.
Trading volumes were low and the initial move higher sparked by solid demand at both Spanish and French bond auctions as well hopes the ECB could take further action in easing the region's debt crisis soon lost ground.
We are still retaining a cautious outlook, the overhangs are substantial and the route to a more sustainable euro area is complicated, said Bill Dinning, head of investment strategy at Kames Capital in Edinburgh, which has $76.4 billion under management.
The outlook for Europe is not good and a lot of people are forecasting recession.
Bank stocks, a focus in the euro zone sovereign debt crisis due to their exposure, were among the worst performers, with the STOXX Europe 600 Banks index <.SX7P> down 1 percent.
The pan-European FTSEurofirst 300 <.FTEU3> index of top shares provisionally closed down 0.6 percent at 976.38 points after jumping 3.6 percent on Wednesday following a coordinated move by central banks to inject liquidity into the financial system to ease interbank stress.
The index, which rose above its 38.2 percent Fibonacci Retracement at 961.45 from its September low to October high in the previous session, was finding resistance at 987.07 -- its 23.6 percent Fibonacci Retracement level.
(Reporting by Joanne Frearson, editing by Atul Prakash)