European main stock markets took a hit yesterday amid renewed concern about the strength of recovery from the worst global economic crisis in decades after some mixed data and forecasts.

The Organisation for Economic Cooperation and Development said growth in Europe had returned earlier than expected but warned the recovery would be slow and could be undermined by financial sector instability and unemployment.

The OECD also urged developed nations to keep economic stimulus measures in place, warned governments to tackle mounting debt and said growth was "likely to fluctuate around a modest underlying trend for some time to come."

London's key FTSE 100 index fell 1.39 per cent to 5,267.7 points, the Frankfurt DAX lost 1.48 per cent to finish at 5,702.18 points and the Paris CAC 40 tumbled 1.77 per cent to 3,760.22 points.

Stocks in Zurich fell 1.29 per cent, Madrid lost 1.56 per cent, Brussels dropped 1.58 per cent and Milan plunged 2.19 per cent. The DJ Euro Stoxx 50 index of top eurozone shares decreased by 1.55 per cent to 2,863.33 points.

Lower metals prices helped depress stocks further, with mining companies among the biggest losers of the day on the London Stock Exchange.

"The effects of the mining sector's volatility continued to be felt, with nine out of the ten biggest losers (on the FTSE 100) coming from that industry," said David Jones from financial spread-better IG Index.

Investors in London meanwhile pondered news that recession-battered Britain had a public deficit of £5.9 billion (€6.6 billion) last month.

The deficit or "public sector net cash requirement" for October compared with a repayment of £2.5 billion during the same month in 2008, the Office for National Statistics said in a statement.

Britain's longest recession on record, which is ongoing, has sapped taxation revenues and ramped up government spending on unemployment benefits and economic stimulus measures.

On a more upbeat note, British retail sales jumped by 3.4 per cent in October from the same month in 2008 - the sharpest year-on-year rise for 17 months.

Tokyo's Nikkei-225 index slumped 1.32 per cent earlier in the day to close at 9,549.47 points, depressed by a weak performance overnight on Wall Street and worries about domestic firms' plans to issue new shares, traders said.

US stocks had ended mostly lower on Wednesday, as investors consolidated recent hefty gains in the face of some poorly-received US economic data. Yesterday afternoon, the Dow Jones was down 1.31 per cent.

Asia and the United States are pulling the world out of an economic vortex with surprising if "modest" speed, the OECD said in its report.

The OECD, a grouping of 30 developed economies, said Asia underpinned the recovery and the United States was undergoing a sudden rebound, switching to an expected 2.5 per cent growth next year from 2.5 per cent contraction this year.

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