European shares end down

European shares drifted to a lower close yesterday, with telecoms leading the declines after France announced plans to sell shares in France Telecom worth as much as $5.5 billion, while oil near $55 also weighed.

The FTSEurofirst 300 index of pan-European blue chips closed 0.3 per cent weaker at 1,114 points.

Volumes were very thin at around 1.5 billion shares and gainers were outnumbered by fallers by more than two to one.

The narrower DJ Euro Stoxx 50 index shed 0.5 per cent to 3,099.2 points.

Indexes hit three-year highs last week, but have backed off since soft US employment data on Friday rekindled doubts about the strength of the economic recovery there.

"The market is lacking inspiration," said Gert-Jan Geels, a fund manager at Eureffect Asset Management in the Netherlands.

"It seems clear that the US jobs recovery isn't as strong as everyone was hoping, so now we are waiting for further evidence that company profits are continuing to improve."

While earnings have been rising, cost cutting has remained the main driver of growth in a sluggish European economic environment, Mr Geels said.

"On paper it looks OK but in most cases, we're not seeing big improvements in turnover."

In New York, the blue-chip Dow Jones industrial average was steady at 10,463 points, while the Nasdaq Composite Index was also flat, at 2,071.4 points by 1622 GMT.

A host of merger and acquisition developments in the United States was offset by further gains in oil prices, with US light crude hitting a six-week high of $55.55 as markets fretted about supplies of winter heating fuels. Oil prices eased late in the European session.

Around Europe, London's FTSE 100, Paris' CAC-40 and Zurich's SMI all closed down around 0.4 per cent, while Frankfurt's DAX closed 0.3 per cent weaker.

France Telecom closed down 2.1 per cent after the French government said it would sell a further six to eight per cent of the company at a slight discount to the market.

Other telecoms stocks also slipped as investors made room in their portfolios for the new France Telecom shares. Deutsche Telekom and Telecom Italia both sank 1.8 per cent.

German industrial group Siemens bucked the weaker trend, adding 1.5 per cent on hopes it has found a partner for its loss-making mobile handsets unit. The Financial Times reported Siemens is set to form a handsets joint venture with Taiwanese tech company BenQ.

German chipmaker Infineon closed down 3.1 per cent on fears it might lose its supply contract with Siemens, its largest customer for mobile phone chips.