Soaring oil, economic doubts pound European stocks

European shares lost nearly all the week's gains yesterday as oil prices near $60 a barrel fuelled concern over profits, especially at chemicals and airlines companies, and mixed US economic data did not help.

Auto-makers fell on worries over sales as fuel costs rise, with Porsche hit further as investors overlooked solid car sales for the 10 months to May to focus on concerns over a poorer mix of models. Its shares shed 2.4 per cent.

Car part suppliers Valeo and Continental and tyre maker Michelin also fell. They all use oil as raw material but have little scope to pass higher energy costs on to savings-driven car makers.

At 1540 GMT, the FTSEurofirst 300 index had lost 0.8 per cent to close unofficially at 1,141.9 points, about 0.8 per cent below Thursday's three-year highs, having erased most of a 1.1 per cent rally between Tuesday and Thursday.

The index remains nearly 10 per cent higher than it began the year, but worries that record-high oil prices may pressure the US economy, where growth is already slowing, bedevilled sentiment. Data showing orders for US-made durable goods had slipped unexpectedly by 0.2 per cent in May - excluding the volatile transportation category - added to the economic pessimism.

"We look at the core trend, and it suggests more softness for US industry," Jason Bonanca, director of foreign exchange strategy at CSFB in New York said, adding the data would not alter the path of US monetary policy, with the Federal Reserve widely expected to raise rates next Thursday.

Around Europe, London's FTSE 100 index and Paris's CAC 40 shed 0.7 per cent and one per cent, respectively, while Frankfurt's DAX slid 1.3 per cent. The Swiss Market Index was down 0.8 per cent in Zurich.

The DJ Stoxx chemicals sector fell on worries about higher raw material costs, with Britain's Imperial Chemical Industries and Germany's BASF slipping four per cent and 2.3 per cent, respectively.

Technology stocks also fell. Chip makers Infineon and STMicroelectronics shed nearly three per cent each after a drop in the price of computer memory chips pushed Micron Technology to its largest quarterly loss in two years.