European shares fell yesterday for the second consecutive session, with banking stocks down and miners lower as metal prices retreated on a firmer dollar, while defensive food producers and drugmakers gained.

The pan-European FTSEurofirst 300 index of top shares closed down 0.1 per cent at 1,052.55 points. The index has risen 63 per cent since reaching a lifetime low in March 9, 2009, but is little changed this year.

"Markets are having a bit of a breather and hopefully it is no more than a bit of light profit taking," said Mike Lenhoff, strategist at Brewin Dolphin.

"Earnings are coming through quite nicely and I think there is still a fair degree of confidence which is helpful for companies. I would put this down to nothing more than a slight technical adjustment."

Banks took the most points off the index. HSBC, Banco Santander, Standard Chartered and Société Générale fell 0.7 to 2.8 per cent.

Miners slipped as metal prices retreated. Anglo American, BHP Billiton and Rio Tinto lost 0.5 to 0.7 per cent. However, Chilean copper miner Antofagasta recovered after earlier falls to gain 1.1 per cent after it said earnings per share excluding exceptional items fell to 67.7 cents a touch below a consensus forecast.

Airbus parent EADS lost 2.8 per cent after it reported a heavy loss in 2009, scrapped its dividend and said production problems on its A380 superjumbo would hit its core profit this year.

Across Europe, the FTSE 100 index slipped 0.1 per cent, while Germany's DAX and France's CAC 40 rose 0.2 per cent. Food producers and drugmakers were in demand as investors stuck to the safety of defensive stocks.

Nestlé was up 1.2 per cent, while drugmakers GlaxoSmithKline and Novartis gained 1.6 to 0.8 per cent respectively. Sanofi-Aventis rose 0.8 per cent after the company and Merck agreed to combine the French drugmaker's Merial unit and Merck's Intervet/Schering Plough to take the top spot in the $19 billion market. Merck fell 0.2 per cent.

British engineer Weir Group gained 7.9 per cent after it raised its outlook for the year on better than expected trading in the first weeks of 2010, sending its shares to a 19-month high.