European shares feel pressure of weak bank results

European shares were slightly lower on Wednesday as weak results from banks, including BNP Paribas, and carmaker Daimler brought an end to the market's six-day rally. Europe's STOXX 600 fell 0.1 per cent in early deals, with the index stalled near the more than two-month highs hit on Tuesday.

Germany's trade-sensitive DAX was down 0.4 per cent and France's CAC 40 fell 0.3 per cent. President U.S. Donald Trump's combative State of the Union added to gloom on markets as he unveiled no new infrastructure initiatives and instead raised the prospect of another shutdown should financing for the Wall not be forthcoming.

Daimler fell to the bottom of the DAX, down 1.9 per cent, after the German carmaker said fourth-quarter operating profit fell 22 per cent, as trade wars and ballooning costs for developing electric and self-driving cars hit profits at Mercedes-Benz cars. Automakers and suppliers were down 0.6 per cent.

Banks were the biggest drag on the STOXX 600, with shares BNP Paribas down 1.6 per cent after France's largest-listed lender lowered its profit and revenue growth targets for 2020 after a tough fourth quarter. The news reinforced concerns about the euro-zone banking sector's struggle with low-interest rates and tough trading conditions.

Credit Suisse was down 0.6 per cent after the Swiss bank said it expected a higher tax rate for 2018 than previously forecast. In contrasting fortunes, London-listed CYBG jumped 10 per cent to the top of the STOXX 600 after reporting a slight rise in lending in the first quarter of its 2019 fiscal year, facing down the strong competition on Britain's housing mortgage market.

Dassault Systemes shot to four-month highs after the French software company's fourth-quarter revenue topped guidance, while Finnish engineering firm Metso jumped more than 8 per cent after its results. CRH rallied on news that activist investor Cevian Capital has built a stake to become the second largest shareholder in the heavy materials and building products group.

(With inputs from agencies.)