European shares fall as investors weigh key earnings

April 25 (Reuters) – European shares dropped on Tuesday as investors scrutinised more corporate earnings and weighed comments by European Central Bank policymakers on the outlook for interest rates.

The pan-European STOXX 600 index was down 0.4% by 0718 GMT, with mining and banking shares shedding 1.8% and 1.5%, respectively, while the food and beverages index rose 0.2%.

Banking sector jitters came back to the fore after US lender First Republic Bank said its deposits tumbled more than $100 billion last quarter and that it was exploring options such as restructuring its balance sheet.

UBS Group UBSG.S lost 2.8% after the bank set aside more money to draw a line under its involvement in toxic mortgages, dealing a heavy blow to its first-quarter profit.

ECB’s Philip Lane told a French paper that the central bank will need to raise interest rates again at its policy meeting next week, while board member Isabel Schnabel told Politico that a 50 basis points rate hike is not off the table.

Nestle rose 1.6% after it reported better-than-expected first-quarter sales.

US heavyweights Microsoft Corp and Google-owner Alphabet Inc will report results later in the day.

(Reporting by Shubham Batra in Bengaluru; Editing by Savio D’Souza)