Financials pull European shares from 13-month high

European shares yesterday slipped from a 13-month high the previous day, dampened by a smaller-than-expected rise in US industrial production which hurt sentiment and pressured miners and financials.

The FTSEurofirst 300 index of top European shares ended 0.4 per cent lower at 1,030.00 points after rising 1.5 per cent on Monday. The index is up 24 per cent in 2009 and has surged 60 per cent since hitting a record low in March.

Banks were among the top losers, with the DJ STOXX banking index falling 1.3 per cent. Standard Chartered, HSBC, Barclays, BNP Paribas, Société Générale and Credit Agricole were down between 1.2 per cent and 3.1 per cent.

UBS fell 3.6 per cent after its boss Oswald Gruebel vowed to rebuild the loss-making bank and its reputation and set an ambitious target for annual pre-tax profit.

Across Europe, Britain's FTSE 100 index, Germany's DAX and France's CAC 40 fell 0.4-0.9 per cent.

"The strength of the market is diminishing and the number of stocks that push the market higher is gradually falling," said Koen De Leus, economist at KBC Securities.

"Now you don't have any support from company earnings so the market is going to be dependent on macro-economic data."

Federal Reserve data showed US industrial production rose by just 0.1 per cent last month as auto manufacturers scaled back following the end of the "cash for clunkers" incentive.

"I would say after a pretty strong run it (the market) is taking a breather," said Peter Dixon, economist at Commerzbank.

Miners lost ground after jumping in the previous session, with investors taking profits after spot gold, copper and zinc prices fell on a rise in the dollar.

The DJ STOXX basic resources index fell 0.6 per cent, while BHP Billiton, Anglo American, Antofagasta, Rio Tinto, Xstrata and Eurasian Natural Resources slipped 0.9 to 2.2 per cent.

A 0.4 per cent drop in crude oil prices hurt energy stocks, with Royal Dutch Shell, BG Group, Tullow Oil, Repsol, Total and StatoilHydro shedding 0.1 to 0.6 per cent.

"It seems that the major indices are taking a breath after yesterday's gains. However, it feels like the risk of some aggressive profit taking is still around," said James Hughes, analyst at CMC Markets.

Among significant movers, bancassurer Irish Life & Permanent slipped 12 per cent after releasing a weaker set of bad loan and margin forecasts.

Shares in French hotel group Accor rose 2.4 per cent after the firm said it will decide by the end of the year whether to split up its two main businesses.

K+S gained 4.5 per cent amid market talk that US billionaire investor Warren Buffett might be interested in taking a stake in the German fertiliser and salts specialist. K+S declined to comment. Asset manager GAM Holding AG was up 5.8 per cent after it said assets under management rebounded between June and October, although inflows were mainly into low margin products with alternative products still under pressure.