LONDON: A raft of weak corporate earnings coupled with sharp drops in some major luxury goods stocks weighed on European equities on Wednesday.
Luxury group Kering was among the worst performers after reporting sales dropped by more than expected, with rivals such as Burberry and Hugo Boss also retreating. Kering fell 3.9 percent.
Finnish elevator company Kone slumped 5.3 percent after warning of uncertainty in its main market, China, and posting weaker than expected profits.
British supermarket operator Tesco dropped 5.2 percent after reporting its worst ever loss.
Tesco's shares initially rose as much as 2.4 percent, with some traders expressing relief at Tesco's determination to restructure its business, but the stock then lost ground as more pessimism set in, with one major institutional investor saying that the results were as ugly as feared.
The pan-European FTSEurofirst 300 index closed flat at 1,628.35 points. Germany's DAX closed down 0.6 percent.
"I'm short on the markets here. There are a lot of negative factors coming together, such as the weak earnings and the ongoing worries over Greece," said Clairinvest fund manager Ion-Marc Valahu.
GREEK CONCERNS
Shut out of bond markets, Greece is on the verge of bankruptcy and could run out of cash in weeks unless it strikes a deal with foreign creditors to unlock further bailout aid.
The Athens stock market rose 2.1 percent on Wednesday after the European Central Bank raised its emergency funding cap for Greek banks to 75.5 billion euros, according to a source , but some traders remained wary.
"With no chance of a deal at Friday's Eurogroup meeting in Riga, Greece has missed its latest chance to show genuine intent in regards to reforms, leaving it friendless, penniless and pretty much hopeless," said Spreadex analyst Connor Campbell.
Among standout gainers, shares in Volvo jumped 15 percent after the company named the head of Volkswagen-owned Scania as its chief executive.
In spite of the pullback on Wednesday, the backdrop of a weak euro and monetary stimulus from the European Central Bank's bond-buying scheme has fuelled investor demand for equities.
Germany's DAX remains near record highs while the FTSEurofirst 300 is also near its highest level in more than 14 years. The FTSEurofirst has risen 19 percent so far this year.
"We are generally quite bullish on western Europe at the moment here, and have been buyers in particular of German and French equities," said Sanlam Securities' head of execution trading Mark Ward.
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