LONDON, April 9 (Reuters) - European shares finished lower on Tuesday, with concerns about a weak first-quarter earnings season more than outweighing a rally in miners on prospects for continued strong metals demand from China.
The pan-European FTSEurofirst 300 closed 0.1 percent lower at 1,163.61 points, retreating from a session high of 1,172.07 in afternoon trade after a muted start on Wall Street.
Sentiment was hurt by an unexpected sell-off in U.S. aluminium giant Alcoa, which traditionally kicks off the global reporting season, as investors overlooked forecast-beating earnings to focus instead on weaker revenues.
Weak demand in Europe was a key drag on Alcoa's results, and also hurt March sales at Volkswagen, with shares in the German carmaker dropping 2.9 percent.
The early numbers suggest that first-quarter results are unlikely to feature any strong pick-up in European corporate earnings, which analysts say is needed if the equity rally - started by central bank stimulus last summer - is to continue.
"As Alcoa has shown, the disappointment on the revenue side clearly underpins that the dynamics for earnings growth are rather weak ... (and) there will still be downward revisions for 2013 and 2014 earnings," said Gerhard Schwarz, head of equity strategy at Baader Bank.
"We are currently in quite a fragile situation. I think, however, that this is a digestion phase for the market, it's not the start of a bigger downward move. We need to see more confirmation that the hard economic data is firming, and I think this will be delivered in the second quarter."