European stocks ease on weak growth, rate worries

European shares eased yesterday from three-and-a-half-year highs as a weaker-than-expected reading on a key business sentiment gauge in the region's largest economy, Germany, increased fears of a growth slowdown.

Concerns that an apparently imminent central bank interest rate increase might dampen growth also weighed on investor sentiment.

Activity was subdued as US markets were closed for the Thanksgiving holiday.

"The market has been consolidating today after the recent strong rises. There hasn't been too much news," said Helaba Trust equity strategist Markus Reinwand.

The FTSEurofirst 300 index of pan-European blue chips closed unofficially at 1,245.74 points, down 0.18 per cent, after briefly setting a new multi-year session high of 1,249.34.

Markets took a downturn after a closely watched economic report showed German business confidence had fallen more than expected in this month as retailers took fright at government tax plans and firms braced for a rise in eurozone rates.

Leading stock market indices in London, Frankfurt, Paris and Zurich all closed lower and a majority of European sector indices ended the day in the red.

Banks eased 0.3 per cent with France's BNP Paribas among the day's biggest decliners, off 1.4 per cent as investors deemed that its forecast-beating quarterly net profit was already priced into the stock's valuation.

Britain's HBOS fell 1.3 per cent amid fresh talk that it may bid for Australia's fifth-largest commercial bank.

But Credit Suisse bucked the sector trend to add 2.2 per cent after an actuary decided in favour of its Winterthur insurance unit in a dispute with XL Insurance Ltd, ending the threat of a 1 billion Swiss franc ($760 million) payout.

The mining sector was up 0.6 per cent, lifted by higher copper prices, with Anglo American's 1.4 per cent gain leading the advance.

Also on the upside, Union Fenosa gained 2.6 per cent to €31.26 after Spanish builder Actividades de Construccion y Servicios (ACS) said it was bidding for a further 10 per cent of the Spanish utility at €33 per share.

ACS stock fell 1.0 per cent.