European shares edged lower on Tuesday as disappointing earnings reports from Diageo and Bayer took the shine off a jump in growth-linked cyclical stocks, while investors awaited signs of progress on more U.S. fiscal stimulus.

The world's largest spirits maker, Diageo Plc, slid 5.9 as it reported a bigger-than-expected decline in underlying net sales as demand for its whiskeys, vodka and gin fell in all markets except North America.

Energy major BP's stock jumped 5.8 per cent after it cut its dividend in a widely expected move and reported a record $6.7 billion loss in the second quarter as the coronavirus crisis hammered fuel demand.

Leading gains among sectors, the oil & gas sector rose 2.1 per cent, while automakers, banks and travel & leisure rose between 1.5 per cent and 2 per cent.

The pan-European STOXX 600 was down 0.2 per cent by 0727 GMT, although Eurozone blue-chip stocks gained 0.5 per cent.

German drugs and pesticides group Bayer fell 3 per cent as it reported a 9.5 billion euro ($11.2 billion) net loss for the second quarter, following a $10.9 billion settlement of U.S. lawsuits claiming that its weedkiller Roundup caused cancer.