LONDON: Most European stock markets faltered on Thursday following a clutch of disappointing bank earnings as well as poor US data, while the ECB dampened sentiment by hinting another rate hike is not imminent.
London's benchmark FTSE 100 index fell 1.07 percent to 5,919.98 points while in Paris the CAC 40 shed 0.95 percent to 4,004.87 points.
In Frankfurt the DAX bucked the trend to post a slight gain of 0.04 percent to 7,376.96 points.
Elsewhere in Europe, Brussels dipped 0.28 percent, Swiss stocks and Amsterdam both gave up 0.31 percent, Milan dropped 0.79 percent and Madrid fell 0.80 percent.
Lisbon gained 1.24 percent, lead by bank shares gaining on news that the country's EU-IMF bailout package contains up to 12 billion euros for bank recapitalisation.
London ‘has been hampered after disappointing first-quarter results from Lloyds,’ said Manoj Ladwa, senior trader at ETX Capital.
Britain's state-rescued Lloyds Banking Group reported on Thursday a net loss of £2.4 billion after setting aside a vast sum to compensate clients who were mis-sold payment insurance.
The lender's share price slumped 8.0 percent to 53.38 pence in London trade.
The net loss after tax of £2.4 billion (2.7 billion euros, $4.0 billion) for the three months to March 31 compared with a net profit of £169 million in the first quarter of 2010, LBG said in a results statement.
LBG, 41-percent owned by the taxpayer, said it was allocating £3.2 billion to cover payouts to customers who were mis-sold payment protection insurance.
In Paris, Societe Generale slumped 4.98 percent to 43.25 euros after the lender announced first-quarter net profits of 916 million euros ($1.36 billion), a 13.8 percent drop on the same period last year.
That included a writedown of 239 million euros for the reevaluation of its own financial liabilities.
As expected, both the Bank of England and European Central Bank kept rates on hold.
However ECB president Jean-Claude Trichet used language suggesting the next rate hike won't come before July, if then.
‘Weakness also comes amid a rather concerted selling effort in Europe, where investors have shown a negative reaction to comments from European Central Bank president Trichet about monitoring prices for the next few periods before making any policy changes,’ said analysts at Briefing.com.
US stocks dropped in early trade after weekly unemployment claims numbers jumped far past expectations, but good tech sector earnings helped the Nasdaq edge upward.
At 1600 GMT the Dow Jones Industrial Average was down 0.54 percent at 12,654.25 point.
The broader S&P 500 was off 0.17 percent at 1,345.03 points, while the tech-heavy Nasdaq Composite added 0.18 percent to 8,833.34 points.
The market retreat came after the Labor Department reported that initial jobless claims rose to 474,000 in the week ending April 30, a 10 percent increase from the prior week. Most analysts expected claims would fall.
Nasdaq was helped by a good third quarter from JDS Uniphase which beat average earnings forecasts by 10 percent.
Shares in the high-tech optical equipment maker rose 10.85 percent to $22.17.
US automaker GM turned in strong results ahead of the opening bell, more than tripling net income, helped by huge gains from the sale of shares in Delphi Automotive and Ally Financial.
First-quarter net profit was $3.15 billion, and earnings per share was $1.77, or, excluding extraordinary items, 95 cents, topping analysts' 93 cents average estimate.
GM shares fell 2.85 percent to $32.10, roughly the level at the beginning of the week before a pre-earnings jump to over $33 on Tuesday and Wednesday.
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