European shares slip, weighed by oils, miners

European shares fell yesterday, pressured by disappointing earnings from Adecco and Sainsbury and fears that slowing global economic growth might be behind the recent dip in oil prices.

Heavily weighted energy shares also fell prey to the lower crude price, with BP and Total down 0.55 per cent and 1.3 per cent, respectively, on worries that a near three-month slide of 20 per cent in oil prices will crimp their profits.

Britain's Land Securities was among a batch of blue-chip gainers that helped limit market losses. The property firm posted a near doubling in half-year profit and pleased investors with a confident outlook, sending its shares 5.3 per cent higher.

The FTSEurofirst 300 index of pan-European blue chips shed 0.7 percent to end at 1,225.1 points, down 1.4 per cent from a three-and-a-half-year high of 1,242.88 set on Monday.

With a month still to go until the year-end, investors appear reluctant to open new positions that could jeopardise gains of around 18 per cent since the start of 2005, using instead any excuse to lock in these returns, observers said.

"We are in a classical year-end market anxiety, with many investors wishing to stop the meter now on what has been a very nice performance so far this year. So part of the current hesitation probably comes from that," said Pierre-Yves Gauthier, strategist at French broker OddoSecurities.

Paradoxically, the dip in oil prices has weighed on sentiment, instead of relieving investors of inflation worries. Many investors now interpret lower oil prices as a sign of slower economic growth, market watchers said.

"Oil prices are driven by demand and thus by economic growth, and markets love growth, so investors can read that the other way around and think that if oil prices are heading down it's because growth is weaker," Mr Gauthier said.

Worries about the state of the global economy coupled with softer copper prices to hit mining stocks, with Anglo American and Rio Tinto each losing nearly 1.5 per cent.

Sentiment in the sector was rattled as copper prices fell steeply in the wake of news that China's State Reserve Bureau is seeking permission to export 200,000 tonnes.

The bureau is at the centre of market speculation that one of its traders has built a potentially costly short position of between 100,000 and 200,000 tonnes of copper on the London Metal Exchange.

Overall sentiment was further held back after Swiss staffing firm Adecco's third-quarter profit growth fell short of market expectations, sending its shares down 3.4 per cent.

First-half profits at UK supermarket group Sainsbury also missed market forecasts. Its shares fell 1.5 per cent despite Britain's third-largest foodseller saying it was still on the road to recovery.