European stocks softer

European shares were softer in thin trade yesterday after data showing that the US economy was stronger than expected, while oil stocks weighed on the markets, offsetting gains in mining shares.

Siemens was top gainer in the DJ Stoxx 50 index after the German industrial conglomerate won with IBM a €7.1 billion contract to manage and modernise non-military IT systems of Germany's armed forces.

"We have got very thin volumes today. Many market participants are already or still on holiday. And some have already closed their books," Nico Breite, trader at German bank NordLB said.

"All everyone is trying to do now is a bit of fine-tuning," Mr Breite added.

The pan-European FTSEurofirst index of 300 leading shares closed down 0.01 per cent at 1,487.81 points.

Among major national indexes, Germany's DAX was up 0.04 per cent after hitting a near six-year high, while Britain's FTSE 100 was down 0.7 per cent and France's CAC 40 slid 0.12 per cent.

European shares had ticked into positive territory earlier after US economic data. US existing home sales for November, December's Chicago PMI, and the consumer confidence number all came in higher than market forecasts.

"The housing data confirms what we have been thinking, which is that the US economy is a good deal more robust than many seem to think," a London-based strategist said.

"Overall, this means that the Fed is less likely to cut interest rates in the near- to mid-term," he added. The euro pared gains against the dollar to $1.3160, coming off session highs at $1.3202.

The oil price gained slightly after US government data showed that crude inventories in the United States fell much steeper last week than expected.

"The inventories came in a lot lower than expected and this is going to affect some of the oil majors," said Ian Griffiths, trader at CMC Markets. "But because volumes are so thin there is not going to be a tremendous amount of interest," he added.

Shares in BP were down 0.5 per cent, Royal Dutch Shell fell 0.4 per cent and Total was down 0.4 per cent.

BHP Billiton was up 0.9 per cent, Xstrata gained 2.4 per cent, and Antofagasta rose 1.3 per cent as tin extended the previous day's gains, as bullish news from major producer Indonesia encouraged more buying. Copper traded steady.

Among decliners were telecom shares, with Vodafone down 0.7 per cent, after the Financial Times reported that the British mobile giant had submitted a $17 billion-$18 billion bid for mobile operator Hutchison Essar, similar to a reported bid by the Essar group. India's second-biggest mobile services provider Reliance Communications also declared its interest in Hutchison Essar.