European shares end lower for fourth day as utilities dip

European equities ended down for a fourth straight session yesterday, led lower by utilities and energy shares, as investors remained nervous ahead of earnings figures and worries about the pace of global economic recovery.

The FTSEurofirst 300 index of top European shares finished 0.8 per cent lower at 826.36 points after rising to a high of 840.27. But the index, which fell 45 per cent in 2008, is still up 28 per cent since hitting a record low in early March.

Across Europe, UK's FTSE 100 index, Germany's DAX and France's CAC 40 were down 0.2-1.2 per cent.

Utilities shares were among top decliners, with GDF Suez, E.ON, National Grid and Centrica slipping 1.6-3.8 per cent.

Energy shares tracked crude oil prices, which fell two per cent to trade below $63 a barrel. Royal Dutch Shell, Total and Cairn Energy fell 1.1-1.6 per cent.

Elsewhere in the sector, Repsol fell 1.6 per cent, in line with broader market. Sources said yesterday that China National Petroleum Corp. (CNPC), the country's largest oil company, could pay up to $14.5 billion for 75 per cent of Spanish oil major's Argentine unit YPF.

"The markets are in a consolidation mode," said Andrew Bell, head of research at Rensburg Sheppards. "To propel the markets higher, we have got to see evidence of the turning point in earnings and of the recovery and economic growth moving from less bad to a little bit better."

"I think that so much stimulus has been thrown at these economies that the risk of a significant downside disappointment is quite limited," he added.

The OECD said that governments risk killing economic recovery if they withdraw stimulus spending too fast, and added that the name of the game was to move from policy-driven recovery to a self-sustaining growth.

However, Germany provided a glimmer of hope for a global recovery, reporting an upturn in manufacturing orders.

Pharmaceutical stocks, generally seen as defensive shares, also slipped. GlaxoSmithKline, Novartis and Roche fell 0.5-1.1 per cent.

"We are bouncing around on very low volumes," said Howard Wheeldon, strategist at BGC Partners, in London. "We may continue moving sideways for many months. The worst of the crisis may be over, but we're not seeing recovery."

Financial stocks gained ground, however. Standard Chartered, Barclays, BNP Paribas, Natixis and Commerzbank rose 0.9-2.9 percent.

The banking sector was the second biggest loser in 2008 following a financial crisis, the worst since the Great Depression of the 1930s, but has recovered this year.

The sector has gained 17 per cent this year and European Union finance ministers agreed in principle yesterday to make capital rules for banks more flexible to reduce their likelihood of worsening boom-and-bust cycles in the economy.

Miners also advanced. BHP Billiton, Antofagasta, Rio Tinto, Xstrata and Eurasian Natural Resources rose 0.7-2 per cent.

Building materials group CRH Plc warned pre-tax profit nosedived in the first half and said trading would remain extremely difficult, but investors bet the worst was behind the Irish group, sending its shares five per cent higher.

Among automobile shares, BMW fell 0.6 per cent after group vehicles sales fell 12.7 per cent in June to 127,546 units, bringing the first-half decline to 19.5 per cent amid a sharp economic slump.