By Sruthi Shankar and Susan Mathew
(Reuters) - European shares fell for a third straight session on Wednesday, as losses in healthcare and construction stocks countered a lift from encouraging earnings from consumer giant Nestle and telecoms equipment maker Ericsson (BS:ERICAs).
The pan-European STOXX 600 (STOXX) fell 1.3% to close at its lowest in more than two weeks.
Losses were broad-based with only the basic material sector (SXPP) in the green, supported by rising copper prices.
Nestle (S:NESN) lifted its 2020 sales forecast following a quarterly beat, but shares inched lower after early gains.
Sweden's Ericsson (ST:ERICb) jumped 9.6% as higher margins and China's 5G rollout helped the company beat quarterly core earnings estimates.
"Earnings have been generally well above expectations, and guidance has been a positive surprise," said Patrick Moonen, principal strategist in the multi-asset team at NN Investment Partners.
"But there are other elements that are currently at play and may have a bigger impact on the market performance than earnings," he said, pointing to many European countries reimposing mobility restrictions following a surge in COVID-19 cases that could weigh on fourth-quarter economic activity.
The STOXX 600 has struggled to break out of a trading range since June, when it recouped a large part of the early pandemic-driven losses. The benchmark is still about 16% below its all-time high.
Capital Economics expects the new containment measures to cause the euro-zone economy to stagnate over the next six months, resulting in only a slight increase in GDP on a quarter-on-quarter basis in the fourth quarter and zero growth in the first quarter of next year.
London's exporter-heavy FTSE 100 (FTSE) underperformed, marking its worst session in a month, hit by a surge in pound after bullish Brexit comments.
Vivendi (PA:VIV) rose 1.6% after the French media group reported a bigger-than-expected quarterly sales and unveiled plans to list its most-prized asset, Universal Music Group, in 2022.
Third-quarter profits for companies on the STOXX 600 are expected to drop 34.8%, according to Refinitiv data, a slight improvement from the 36.7% predicted at the start of the earnings season.
Of the 29 companies that reported so far, 75.9% have topped earnings expectations.
Gold miner Centamin Plc (L:CEY) slumped 19% to the bottom of STOXX 600 after cutting its 2020 production forecast.
Construction companies also took a knocking, with Assa Abloy (ST:ASSAb), the world's biggest lockmaker, falling 4.1% after it reported a drop in quarterly sales.