European shares dip as Airbus, Rio Tinto plunge; Nestle gains

European shares slipped marginally on Thursday, as investors sifted through a mixed bag of earnings from the likes of Airbus, Rio Tinto and Nestle.

The pan-European index was down 0.26% at 626.97 points by 0918 GMT, retreating from a record close on Wednesday.

Airbus shares fell 6.3% after the world's largest planemaker softened its main jet production target, blaming engine maker Pratt & Whitney for failing to strike a crucial supply agreement.

World's largest iron ore producer Rio Tinto declined 3.8% after the firm reported flat annual earnings that missed expectations on weaker iron ore prices. The broader mining index fell 2.8% and led sectors lower.

Nescafe coffee maker Nestle rose nearly 3% after reporting better-than-expected fourth-quarter sales growth and said it planned to sell its ice cream business. 

"The company is expecting organic sales growth of around 3% to 4% in 2026, which would be one of the most solid years in quite some time. Operating margins are also expected to remain stable — exactly what investors want to see," said Michael Field, chief European equity strategist at Morningstar.

"The message consumers are sending is that these major brands are still alive and well, and people are buying them again at a healthy pace.”

Earnings expectations have improved over the course of this reporting season. Data compiled by LSEG show analysts now see quarterly earnings dropping 0.6% year-on-year, compared with a 4% drop earlier this month.

Investors globally were on edge after the U.S. and Iran heightened military activity in the oil-rich Middle East, even as talks on Tehran's nuclear programme in Geneva showed signs of progress.

European energy stocks were marginally higher, tracking a 1.4% gain in crude prices.

On the data front, initial estimates on euro zone business activity during February are expected later in the day. Economists polled by Reuters expect manufacturing activity to reflect expansion from the previous month.

Air France-KLM reported a record operating profit in stronger-than-expected full-year results, sending its shares soaring 16%.

Among others, French telecoms group Orange climbed 4% to a near 16-year-high after targeting organic cash flow of around 5.2 billion euros ($6.1 billion) by 2028.

Arcadis fell 15% after Netherlands-based sustainable design firm's 2025 revenue missed analyst expectations.

(Reporting by Avinash P and Johann M Cherian in Bengaluru; Editing by Harikrishnan Nair)