Europe stocks hit two-week low as earnings disappoint

Goldman reported lower quarterly earnings, dragged down by its settlement of U.S. Securities and Exchange Commission civil fraud charges and the UK tax on bank executive bonuses, as well as by weaknesses in its trading and investment banking divisions.

"The business is down, demand is down, volumes are down" said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey.

"The appetite for risk continues to go lower and continues to recede and as a result, firms that specialise in financial engineering profit off a risk-centric business model are doing less well."

Societe Generale was down 2.9 percent, Barclays down 2.3 percent and UBS down 1.5 percent.

At 2:20 p.m. British time, the FTSEurofirst 300 index of top European shares was down 0.8 percent at 998.24 points, a level not seen in two weeks.

The Euro STOXX 50, the euro zone's blue chip index, was down 1.2 percent at 2,604.41 points after falling to as low as 2,586.49, less than two points above its key 23.6 percent retracement level of the index's April high to its May low.

"Recent corporate results have been below forecast, although they haven't been disastrous either, and the overall newsflow is pretty mixed" said Jacques Henry, analyst at Louis Capital Markets in Paris.

"This is a chartist' market, with the indexes bouncing up and down between support levels and resistance levels" he said.

Around Europe, UK's FTSE 100 index was down 0.8 percent, Germany's DAX index down 1.3 percent, and France's CAC 40 down 1.5 percent.