By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- Shares of BP PLC declined in an otherwise upbeat European market on Tuesday amid concerns that tougher sanctions on Russia would hurt the oil giant's business. Upbeat earnings reports from GKN PLC and Next PLC lifted the mood in London.

Heavyweight BP (BP) erased earlier gains, losing 1% as attention shifted from the company's solid second-quarter earnings reports to a warning on the potential fallout from further economic restrictions on Russia. BP said that if additional international sanctions are imposed on Russian oil giant Rosneft this "could have a material adverse impact on our relationship with and investment" in the company.

BP bought a nearly 20% stake in Rosneft last year and the investment helped boost the company's second-quarter earnings.

The U.S. and European Union agreed on Monday to adopt the toughest sanctions yet on Russia this week to force Moscow to cut support for the pro-Russia separatists. The EU -- Russia's largest trading partner -- is expected to announce the new measures as early as Tuesday when the 28 national ambassadors meet to finalize the sanctions.

Other decliners

UBS AG (UBS) shares slipped 1.5% even as the Swiss banking major reported a rise in second-quarter profit that beat expectations.

Deutsche Bank AG (DB) lost 0.3% after reporting a fall in second-quarter net profit and revenue and missing Wall Street forecasts.

Renault SA shares gave up 4.1% after the auto maker said revenue slipped in the first six months of the year as an improvement in European sales failed to offset a slide in emerging markets.

St. James's Place PLC slid 3.1% after the U.K. wealth manager reported a 9% drop in first-half pretax profit.

Risers

GKN PLC rallied 6.9% after the car-parts maker posted an increase in first-half profit.

Next PLC advanced 2.6% after the clothing retailer raised its full-year profit guidance and reporting strong sales for the first half.

Standard Chartered PLC added 2% after J.P. Morgan Cazenove lifted the bank to overweight from neutral. The analysts said the upgrade comes after "material underperformance" over the past year and as they anticipate some of the earnings headwinds to abate from the end of 2014.

Compagnie Generale des Etablissements Michelin climbed 1.5%. The French tire maker said sales slipped in the first half, but affirmed its 2014 targets.

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