Global Market: European shares fall as HSBC earnings drag banking stocks

HSBC's revenue miss and unrest in France weigh on European markets, while Novartis gains on an improved earnings outlook.

The pan-European STOXX 600 index was down 0.2% at 639.64 points by 0805 GMT, giving up some of the gains from Monday, when the benchmark had climbed nearly 0.8%.

Banking stocks led the declines, with the sector index falling 1.3% after HSBC shares slumped 6.9%. Europe's largest bank reported revenue below market expectations, partly reflecting slower growth in its wealth business. The results raised concerns about the lender's ability to sustain revenue growth amid a challenging operating environment.

Investor sentiment also remained under pressure due to continuing unrest in France. Student leaders vowed to continue protests despite government concessions on education, fuelling concerns that the movement could spread to trade unions and other activist groups.

The potential for prolonged demonstrations has heightened worries about economic disruption in the euro zone's second-largest economy. French equities fell more than 2% last week as the protests undermined investor confidence.

Elsewhere, healthcare stocks provided some support to the market. Swiss drugmaker Novartis rose 3.1% after raising its full-year core operating income guidance, signalling confidence in its earnings outlook.

Investors were weighing corporate earnings developments against broader political and economic uncertainties as European markets struggled to maintain their recent gains.