European shares end down on fear of US rate rise

European shares fell yesterday, tracking a slide in leading US stock market indexes after higher-than-expected US inflation data sparked concerns that the Federal Reserve may have to raise interest rates.

Disappointing quarterly reports from miner Anglo American and brewer Heineken outweighed rallies in banks, with ABN Amro up after an investor demanded its break up, and Alliance & Leicester up on takeover speculation.

The FTSEurofirst 300 index of top European shares closed 0.66 per cent lower at 1,534.74 points, narrowing this year's advance to 3.5 per cent.

Credit Suisse Asset Management in Germany said it had slightly reduced its equities exposure after last month's strong returns.

In the US, the Dow Jones industrial average was 0.5 per cent lower as the European trading day ended. The broader S&P 500 was down 0.3 per cent.

US consumer prices rose by a higher-than-expected 0.2 per cent month-on-month in January, raising concerns that the Fed might need to tighten monetary policy.

"With the yearly rate at 2.7 per cent, it is not time for the Fed to sound the all-clear on inflation," UniCredit said in a note.

The US data aggravated a slide in European shares started by Anglo American, which ended 2.5 per cent lower after its profit came in at the bottom end of forecasts.