European stocks end lower, miners and techs hit

European shares slackened yesterday as weaker-than-expected US consumer confidence data, China's surprise interest rate rise and mixed results among technology stocks pushed some investors to lock in recent gains.

News that a bomb threat scrawled on a sick bag had caused a British passenger plane from London to Egypt to be diverted to southern Italy added to selling momentum, even though police said within minutes that it appeared to be a false alarm.

But firm energy stocks put a floor under the market's fall. BP gained from a rebound in oil prices as major Opec producer Iran showed no sign of responding favourably to incentives aimed at resolving a nuclear row by a self-imposed August 22 deadline.

The pan-European FTSEurofirst index of 300 leading shares shed 0.2 per cent to end unofficially at 1,357.92 points. The index added two per cent on the week after tamer-than-expected US inflation data cooled fears of aggressive monetary tightening.

A report showing that US consumer sentiment had dropped more than expected in early August, as inflation expectations rose, took the wind out of a small market advance late in the session.

"It's a very stagflationary kind of result," said Peter Kretzmer, senior economist at Banc of America Securities in New York. "This is a larger downward move than what we've seen even though gasoline prices haven't moved that much higher in the month of August."

Miners and steel makers were among the biggest market decliners, with Anglo American and Xstrata down between 1.6 per cent and 2.1 per cent as Beijing's unexpected rate rise stirred worries that slower Chinese economic growth would cap demand for metals.

Technology stocks also wavered, snapping a four-day winning streak after Dell's profit slumped, but several strategists said the appetite for technology stocks in general, and telecoms equipment and hardware providers in particular, was unlikely to wane in coming sessions.