European shares closed over one percent lower with investors turning cautious but also selling particularly financial stocks to take advantage of recent hefty gains.
Analysts said a phase of consolidation was overdue following the very sharp rally. Another factor pushing down banks was the announcement from a number of US lenders that they would be selling billions of dollars worth of new shares to repay government bailout loans. Sharply lower oil and metals prices hit energy and mining companies. Norwegian oil and gas company StatoilHydro posted a smaller-than-expected drop in profits for the first quarter, helped by record output but hit by the falling cost of crude. Investor sentiment was also dampened by French industrial output falling more sharply than expected in March with big drops in production of electronic goods, energy and food. The euro has been at seven week highs against the dollar and the British pound is weak.