Euro zone finance ministers rejected an offer made by private creditors to restructure Greece's debt and if a resolution is not reached by March, when Athens must repay 14.5 billion euros ($18.9 billion) of maturing debt, a messy default could occur.

"Greek debt payments are looming and the situation needs to be resolved. We are concerned about finanicals that still need to raise capital," said Andrea Williams, who manages $2.1 billion in assets for Royal London Asset Management.

Dutch telecom firm KPN dropped 8.3 percent after it cut its 2012 core profit outlook, while German conglomerate Siemens, a bellwether for Europe's manufacturing industry, fell 3 percent after first-quarter results missed analysts forecasts.

"There is enough bearish comment to keep the market struggling, Siemens numbers were not great and will be a concern for the other industrials and KPN has guided down," Williams said.  At 0811 GMT, the FTSEurofirst 300 index of top European shares was down 0.5 percent at 1,042.54 points after hitting its highest close since early August on Monday.