Weak corporate results weighed on European shares on Friday pushing the regional benchmark index to its lowest in a week, while choppy trading in banking shares saw the sector give up some of its recent gains.
Earnings disappointments from the likes of Novo Nordisk soured the mood, with the stock off more than 15 percent, the worst performance across the STOXX 600 on the day.
Investors have shown little tolerance for earnings disappointments in recent weeks, with shares of firms missing estimates or warning on profits getting punished severely.
Concerns over the outlook for regional companies have led to a record 38 straight weeks of outflows from European equity funds, the latest data from Bank of America Merrill Lynch and fund tracker EPFR showed.
Banks, among the most beaten down sectors in Europe this year, have offered some support to regional markets this week following a strong set of results from bellwethers which included a surprise profit at Deutsche Bank.
Financials are the best performing sector in Europe this month and are no longer the year's worst performers having overtaken telecoms during the past week's rally.
"Bank have been doing well on positive earnings, and on the fact that higher bond yields, and especially a steeper yield curve, are helpful for the sector," said Philippe Gijsels, head of research at BNP Paribas Fortis.
Euro zone government bond yields rose to their highest levels for months on Friday in anticipation of a slew of economic data expected to inform inflation and monetary policy expectations. Strong UK economic growth data in the previous day prompted a global bond sell-off as they reduced expectations for a rate cut when the Bank of England meets next week.
"If these trends continue, the banking sector should continue to outperform," BNP's Gijsels said.
But in a sign that longer term concerns about the sector remain, shares of RBS, up as much as 3.5 percent at the open, reversed course and were trading down 1.2 percent after analysts raised doubts about the sustainability of its profits.
European banks are still down 16 percent this year.
Elsewhere, shares in digital security firm Gemalto fell 12 percent after a worse-than-expected outlook for 2017, while Spanish sausage case maker Viscofan's shares dropped 8.3 percent following lower profits.
Satellite firm Eutelsat rose 9 percent after results that showed a steady start to the year.
Overall, third quarter earnings for STOXX 600 companies are expected to contract 9.9 percent, according to data from Thomson Reuters I/B/E/S. (Editing by Vikram Subhedar and Jon Boyle)