European consumers are still worried about beef

"This has been a tough six months," said Jack Greenberg, McDonald's chairman and chief executive.

Although the firm welcomed a 3% increase in sales in Europe, a market where it has at times faced consumer opposition, "there are still consumer concerns about the safety of the European beef supply," Mr Greenberg said.

The firm also said results were hit by the weakness of certain key currencies against the dollar, in particular the pound, the euro, the yen and the Australian dollar.

Closures

Mr Greenberg said McDonald's has put 250 of its restaurants - mainly located in emerging markets - under review for possible closure, as part of a group-wide cost-cutting programme.

McDonald's has carried out periodic reviews of its restaurants before, but this is the first such programme across emerging markets.

Company-wide sales did increase slightly in the second quarter, to $10.239bn from $10.238bn a year earlier.

But the firm's operating profit margin fell to 15.2% in the first half of 2001, from 17% a year before.

McDonald's said it expected "significantly stronger" results in the second half of this year, making it likely that full-year profits could still match last year's.

The company's shares bounced up by almost 3% on Tuesday, as the results were no worse than analysts had expected.