German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, October 21, 2025. REUTERS/staff

By Sukriti Gupta and Purvi Agarwal

(Reuters) -European shares nudged lower on Wednesday, after two sessions of gains, as a flurry of lacklustre earnings from major firms including French cosmetics giant L'Oreal and Birkin bag maker Hermes weighed on investor sentiment.

The continent-wide STOXX 600 index closed 0.2% lower. Major regional indexes were mixed with Germany's DAX down 0.7% while Spain's IBEX edged 0.1% higher.

Technology stocks dragged heavily on the European benchmark index, down 1.4%. Semiconductor-linked stocks including ASM International, ASML and STMicroelectronics dipped after a dour quarterly update from U.S. peer Texas Instruments.

L'Oreal fell 6.7% after the company reported weaker-than-expected third-quarter sales, and Hermes lost 2.3% after its outlook for a slight improvement in key market China failed to excite investors.

Both stocks weighed on the personal and household goods sector, while the broader luxury index declined 1.2%.

Mabrouk Chetouane, head of global markets strategy at Natixis Investment Managers, said the earnings reports from the luxury sector were "clearly flagging the fact that the recovery in China is still struggling".

On the flip side, energy stocks were the biggest boost to the market, up 0.7%, tracking a 2% gain in oil prices.

London's FTSE 100 outperformed peers with a 0.9% rise after data showed British inflation and a key underlying measure of price growth both unexpectedly held steady in September.

It raised expectations for an interest rate cut from the Bank of England before the end of this year. Most British homebuilders and real estate stocks rose, among the biggest gainers on the STOXX 600.

Defence companies, which rose earlier on news that a planned summit between U.S. President Donald Trump and his Russian counterpart was put on hold, pared gains and the wider index reversed course to close 1.1% lower.

"The delay tempers optimism about a potential Ukraine peace framework, contributing to the (already) cautious tone," said David Morrison, senior market analyst at Trade Nation.

Next week's monetary policy decisions by the European Central Bank and U.S. Federal Reserve will be on the radar, amid a U.S. government shutdown at a time when markets are focused on employment data to gauge the monetary policy path of the Fed.

In other moves, ITV plunged 8.6% to the bottom of the STOXX 600 after the broadcaster's largest shareholder, Liberty Global, halved its stake to about 5%.

Barclays rose nearly 5% after the lender announced a surprise 500-million-pound ($671 million) share buyback plan and upgraded its performance target for the year.

UniCredit fell 2.3% after the bank reported third-quarter results, but said it is aiming to improve its profit outlook.

Ipsen rose 5.3% after the French biopharma company reported better-than-expected third-quarter results and upgraded its outlook.

(Reporting by Sukriti Gupta and Purvi Agarwal in Bengaluru; editing by Saumyadeb Chakrabarty and Mark Heinrich)