LONDON (Reuters) - European shares dropped to their lowest level since late March on Thursday as cyclicals fell and some big stocks went ex-dividend, overshadowing a number of upbeat earnings reports.
The pan-European STOXX 600 index ended down 1 percent at 376.05, after touching 375.42, its lowest level since March 28 as basic resources .SXPP and banks .SX7P fell. Euro zone blue chips .STOXX50E slipped 1.1 percent.
In London, the FTSE 100 .FTSE lost 1.4 percent as large caps Anglo American (AAL.L), BT Group (BT.L), Rio Tinto (RIO.L) and Lloyds (LLOY.L) fell after going ex-dividend, while Germany's DAX .GDAXI retreated 1.2 percent.
Company results were back in focus after rising political tensions between the United States and North Korea hit risky assets globally on Wednesday.
Aegon beat expectations for its second quarter underlying pretax profit, while Coca Cola HBC shares hit a record level after first half sales were higher than expected.
"Aegon released a very strong set of Q2 results marked by a significant increase in the group SII ratio, strong underlying earnings and an improved outlook for capital generation," analysts at KBC Securities said in a note.
Second-quarter results, however, put pressure on shares in staffing firm Adecco (ADEN.S), chemicals company Lanxess (LXSG.DE) and consumer group Henkel (HNKG_p.DE), which were among the biggest fallers.
Around 80 percent of MSCI Europe firms have reported second quarter earnings so far, of which more than 60 percent have either met or beaten analysts' expectations, according to Thomson Reuters data.
Financials and the energy and materials sectors have seen the most beats, while industrials have had the most misses.
"Broadly in Europe, I had thought that (earnings) wouldn't be as good, partly because the strength of the euro would make (firms') export markets less attractive and earnings would be more impinged by that, but it doesn't so far seem to be the case," said James Butterfill, head of research and investment strategy at ETF Securities.
Societe Generale analysts said the relationship between the euro and euro zone stocks had flipped (see chart below).
"In the first part of the year, both the euro and euro zone equity markets were up, as the two assets were driven by a stronger economic outlook for the euro area," they said in a note.
"Since mid-May, the correlation has changed: the euro strengthening has become a headwind for the Eurostoxx index."
Shares in Belgian biotech firm Galapagos (GLPG.AS) were among top risers on the STOXX index, surging 8 percent after a successful mid-stage study for the firm's lung fibrosis drug.
Reporting by Kit Rees and Helen Reid; editing by Alexander Smith and Susan Fenton