European shares fell on Tuesday as cautious forecast from HSBC weighed down the benchmark STOXX 600 index, while an upbeat performance in Engie helped assuage some losses after the French energy company posted a higher annual profit.
The continent-wide STOXX 600 index (.STOXX) dipped 0.2% in the first hour of trading.
HSBC Holding Plc (HSBA.L), Europe's biggest bank, fell 1% as its cautious outlook left investors pondering whether a boost from higher interest rates may have already peaked, despite its quarterly profit surging 92%.
Engie SA (ENGIE.PA) rose 5% after reporting a sharp increase in profit for 2022, due to higher natural gas and power prices following Russia's invasion of Ukraine.
Engie lifted up the European utilities sector index (.SX6P) by 0.4%, making the stock the top gainer for the day.
Developments in Ukraine were back in focus, ahead of a speech by Russian President Vladimir Putin to set out the aim for the second year of his invasion.
"Since the last FOMC meeting, we've had some pretty strong numbers coming out of the U.S. and this is already raising concerns about whether inflation is proving more sticky," said Stuart Cole, head macro economist at Equiti Capital.
European equities have witnessed a recent bounce, with the STOXX 600 up more than 9% on better weather conditions, an improving economic outlook and a boost from China's reopening.
"The weather in January was warmer than usual and this, I think, saw consumers venture out more, spending money and taking advantage of the extra leisure and hospitality services that became available to them."
Shares of Smith+Nephew (SN.L) jumped 3.6% after the British medical products maker forecast a positive annual revenue growth.
