European shares ended the week in negative territory, haunted by the twin spectre of rising interest rates and slowing economic growth, while a sales warning sent telecoms firm Cable & Wireless plunging.

Miners were a weak spot as investors locked in their profits on stocks such as BHP Billiton and Anglo American amid signs demand may soon peak, while Prudential led insurers lower on renewed questions around the cost of its guarantees on life policies sold in Taiwan.

The pan-European FTSEurofirst 300 index ended 0.4 per cent lower at 1,207.24 points, near session lows after better-than-expected US jobs data added to the belief among investors that the Federal Reserve had no reason to stop monetary tightening anytime soon.

Hawkish comments this week from US and eurozone central bankers - suggesting monetary tightening might be needed to squash inflationary pressures - ended an almost uninterrupted two-week rally that lifted European equities by 2.4 per cent to Wednesday's intraday 41-month peak of 1,242.24 points.

But market watchers feared more interest rate rises may hurt an economy already showing signs of deceleration. "If (US) monetary policy is still so accommodative, then why is that mortgage applications for new home purchases sagged 1.1 per cent last week and are now down 20 per cent from the recent highs?" said Merrill Lynch economist David Rosenberg.

"We have one of the weakest growth rates ever during a tightening cycle, and we have to ask the question why the Fed still believes it is accommodative at 3.75 per cent."

The FTSEurofirst 300 finished the week on a 1.8-per cent pullback, but remained 16 per cent firmer for the year so far.

Oil prices stabilising below $62 a barrel failed to ease inflation worries.

The recent dip in oil prices weighed on energy stocks, however, with BP ending only 0.2 per cent higher despite pleasing investors with news it had sold its Innovene petrochemicals business for $9 billion to privately owned British chemicals company INEOS.

Around Europe, London's FTSE 100, Paris's CAC 40 and Frankfurt's DAX all ended 0.2 per cent lower, while the Swiss Market Index added 0.1 per cent.

In London, telecoms firm Cable and Wireless stood out with a 14-per cent plunge after warning it expected first-half revenue at its core British business to fall six per cent.

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