Europe close: Geopolitical tensions hold shares back

European shares were down as fears of an economic slowdown and rising geopolitical tensions between the US and China dampened sentiment.

The pan-European Stoxx 600 ended off by 0.32% at 436.07 in with most major continental bourses lower by a similar amount, although Spain's Ibex 35 and the FSTE 100 edged up.

Weak manufacturing data from the US, eurozone and China released during the previous session had stoked worries of a recession. Investors were also watching US House of Representatives Speaker Nancy Pelosi, who arrived in Taiwan on Tuesday, according to reports, prompting an angry response from Beijing.

"While we are still to hear from the remaining 36% of the S&P 500 that are yet to report, the reaction to a largely better-than-expected earnings season has mostly been priced in by this point," said IG senior market analyst Josh Mahony.

"Thus, this week has seen markets shift their attention to the risk posed by Nancy Pelosi has just landed in Taipei despite Chinese government warnings. Sharp volatility for USDCNH highlight market uncertainty over how the trip will play out, but ultimately it is likely that this current posturing will soon blow over despite a short-term rise in tensions."

In equity news, shares in energy giant BP rose 3% as the London-listed oil major posted an estimate-busting rise in second-quarter profits.

Greggs shares advanced as the UK bakery chain maintained guidance after a rise in half-year sales.

Raiffeissen Bank jumped after strong half-year results.

Travis Perkins shares plunged more than 9% after the UK DIY retailer said its Toolstation business swung to a loss in the first half as the pandemic boost faded.

In the six months to 30 June, group revenues rose 10.3% to £2.5bn, while adjusted operating profit dipped to £163m from £164m in the same period a year earlier.

Shares in Finland's Nokian Tyres slumped 11% after the company said it expected lower annual profits due to the war in Ukraine and its exit from Russia.