German stocks led the decline among European peers on Tuesday as shares of speciality chemicals maker Lanxess plunged after lowering its forecast, while a modest interest rate cut by China failed to lift investor sentiment.
Germany's DAX index fell 0.5% by 0709 GMT, retreating farther from a record high it hit on Friday. The continent-wide STOXX 600 index fell 0.4%.
Lanxess fell 13.3% to the bottom of the STOXX 600 after cutting its second-quarter and annual core profit forecasts, saying it saw no demand recovery in June as customers continued to destock.
The chemicals index slid 1.7%, leading sectoral falls.
China cut its key lending benchmarks on Tuesday, with investors worrying that it may be too small to jumpstart a slow economic recovery and awaited a wider stimulus package.
China-exposed luxury giant LVMH, which is Europe's most valuable firm, fell 0.5%, while the basic resources index dropped 0.5%.
(Reporting by Shreyashi Sanyal in Bengaluru)
