European shares knocked by U.S. weakness, mixed earnings
* FTSEurofirst 300 down 1 percent
* Nokia slides after sales miss
* U.S., China misses take sheen off of strong euro zone data
* Periphery outperforms, led by Portugal, Sabadell
LONDON, Jan 23 (Reuters) - European shares fell on Thursday, deteriorating in afternoon trade after weak U.S. and Chinese data raised worries over the global growth outlook, led down by a double digit fall in Nokia as earnings pessimism resurfaced.
Nokia dropped 10.7 percent after it reported a steep fall in sales at its network equipment division, which will be its core business once its sale of its phone business goes through.
It was joined at the bottom of the pan-European FTSEurofirst by British publisher Pearson, which dropped 7.9 percent after warning in a trading update its 2013 earnings per share would be lower than expected.
While European earnings were generally mixed, with Spanish bank Banco de Sabadell SA among those that delivered above expectation results, poor earnings from U.S. firms like MacDonalds and disappointing data combined to hit U.S. shares, dragging Europe lower in the afternoon.
U.S. manufacturing growth slowed in January for the first time in three months, hobbled by slower new orders, with initial jobless claims also rising.
The data compounded weaker than expected Chinese manufacturing data, which depressed the mining sector 0.5 percent.
"With initial jobless claims rising slightly from the previous week and Chinese flash manufacturing PMI contracting for the first time in six months investors will approach equity markets with increasing valuation concerns," Kash Kamal, research analyst at Sucden Financial, said.
The data set the tone for a weak start on Wall Street, helping to erase any optimism from more encouraging data out of the euro zone.
Germany's private sector grew at its fastest pace in more than 2-1/2 years in January as factory orders flooded in, and while French business activity shrank again, it did so at a slower rate than expected.
The FTSEurofirst was down 1 percent at 1,333.91 by 1530 GMT. Some analysts said that more strong domestic data would support future gains.
"I think what is still very supportive is domestic macro momentum. This morning (we had) very strong PMIs in Europe, (and) as long as the macro is pointing up, I think the market's concerns about significant earnings downgrades to come will be easing," JPMorgan analyst Emmanuel Cau said.
Despite the weak performance of European stocks in general, the European periphery outperformed, led up by Portuguese blue chips, up 0.5 percent. The index retraced some of last session's sharp losses after Portugal said it met the target for its 2013 budget deficit.
Among the region's outperformers was Spain's Banco de Sabadell, up 5.9 percent and the FTSEurofirst's top gainer after it tripled profits to beat expectations.
Today's European research round-up
Asset returns in 2013: