European shares relinquished six-year highs yesterday amid doubts over the quality of upcoming corporate earnings, with SAP hit by market talk that the German software firm could issue a profit warning.

The International Monetary Fund's forecast for slower US growth in 2007 also revived economic concerns, prompting investors on both sides of the Atlantic to lock in recent equity gains.

Strong energy stocks helped limit market losses, but the FTSEurofirst 300 index of top European shares closed 0.07 per cent lower at 1,547.24 points. This was below a fresh six-year peak of 1,556.73 hit earlier in the day.

The FTSEurofirst had risen for five consecutive sessions, while the Dow Jones industrial average snapped a string of eight straight sessions of positive finishes.

In its semi-annual check-up of the world economy, the IMF played down threats from a housing-induced US slowdown, concerns over increased volatility in the financial markets, and the possibility that inflation pressures could resurface if oil prices spike again.

It also said that the global economy looked poised for solid growth and that while risks remained, they appeared less threatening than they did six months ago.

But this failed to reassure investors, wary that European stock markets may have got a bit ahead of themselves with a nine per cent rally in the past month, given some doubts over the prospects for economic and earnings growth.

"At this stage of the economic cycle, the difference for investors will be between companies that beat expectations and those which do not," said strategists at French fund managers La Francaise des Placements, who expect rebounding oil prices and slower US growth to impede market gains in the second quarter.

Speculation that German software manufacturer SAP may issue a profit warning pulled the stock 1.1 per cent lower.

Across Europe, London's FTSE 100 index ended 0.1 per cent lower, despite firm oil prices underpinning energy stocks, while Frankfurt's DAX and Zurich's SMI shed 0.2 per cent and Paris's CAC 40 fell 0.3 per cent.

Takeover activity, a key factor in recent equity gains, continued to buoy selected stocks but weighed on others. Sainsbury shed 2.3 per cent as CVC Capital Partners ditched plans to bid for Britain's third-biggest supermarket group.

Other decliners included Carrefour, which closed 1.3 per cent lower ahead of reporting first-quarter sales. The world's second-largest retailer published a forecast-beating 5.2 per cent rise in quarterly revenue after the market closed.

Marks & Spencer ended 2.9 per cent higher after a survey showed British retail sales grew in March at the strongest pace in nearly a year, suggesting higher borrowing costs had not deflated consumer spending.

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