European shares end at five-week lows, miners slump

European stocks fell to five-week lows yesterday, hit by a slump in basic-resources issues on worries high-flying commodity markets were close to a peak.

Miners Antofagasta fell 4.8 per cent, Anglo American lost 4.5 per cent and Rio Tinto shed 4.4 per cent. Topping losers, the DJ Stoxx basic resources sector index fell 3.4 per cent.

The sector, still up 28 per cent so far this year, has been forecast to show the biggest sector earnings growth for 2005 along with the oil and gas industry, boosted by strong prices.

The FTSEurofirst 300 index of pan-European shares closed one per cent weaker at 1,192.4 points, its lowest level since September 5 and about four per cent below a 41-month high of 1,242 points struck this month. "People have reasoned that the sheer extent of the metals price rises means, simplistically, that they have now gone up so high that they can't go up further to the same extent," said JP Morgan metals and mining global strategist Jon Bergtheil.

The pan-European FTSEurofirst index is however still up 14 per cent so far this year on stronger-than-expected company earnings reports.

Dealers said the market was becoming increasingly worried US interest rates would continue to rise and hit economic growth prospects even as oil prices stay high. Also among losers, Danish shipping and oil firm A.P. Moeller-Maersk fell 3.6 per cent after analysts said container shipping rates between China and the United States fell in October.

Container rates are a key indicator of demand for finished goods and ultimately economic output.

Norway's energy-heavy share index closed at a 10-1/2-week low, weighed by a 4.5 per cent fall in Norsk Hydro and a five per cent drop in Statoil and worries about other companies' third-quarter results.

The Oslo bourse benchmark index fell 3.8 per cent to 297.7 points, its lowest closing level since early August.

Video conference maker Tandberg plunged 18 per cent after the Norwegian firm's third-quarter pre-tax profit came below analysts estimates and said business had slowed.

US crude oil prices fell 1.3 per cent to $63 a barrel but concerns remained that high oil prices will dent economic growth and result in lower demand for oil.

The UK FTSE 100 index, which has a big exposure to metal and oil firms, shed 1.4 per cent to a six-week closing low at 5,265.2 points, hit by a warning on oil output from BHP Billiton.