European shares ended lower yesterday after investor sentiment was hit by weak regional growth data, although a bounce off technical support and some solid US data helped indexes close off their lows.

The FTSEurofirst 300 closed down 2.02 points at 1,164.22, hovering around 12 points off two-year highs, while a leading eurozone blue-chip index closed down 0.8 per cent at 2.635.35.

European shares weakened after data showed the eurozone economy shrank 0.6 per cent in the fourth quarter of 2012, but pared losses late after bullish jobs data in the US sparked a recovery on Wall Street.

Wall Street edged back towards five-year highs, while in Europe the Euro STOXX 50 found strong support at 2,600, both from prior peaks and the uptrend line from its 2012 low.

Telecoms were among the worst performers with the sector dogged by concern over earnings and dividends.

Heavyweight mobile giant Vodafone fell 2.4 per cent, extending recent losses, on the back of the company’s prospective purchase of Kable Deutschland, which has raised questions over the company’s leverage and dividend outlook, according to analysts.

Dutch telecoms group KPN fell 0.7 per cent and paring recent gains, which came on the back of takeover rumours. Another rumoured takeover target miner ENRC, down 0.8 per cent, also edged back from recent highs.

Anheuser-Busch InBev, however, rose 5.9 per cent after the world’s largest brewer revised the terms of its $20.1 billion takeover of Mexican brewer Grupo Modelo to overcome US objections.

Investors cheered British fund manager Aberdeen Asset Management, up 2.5 per cent, after the firm unveiled two acquisitions.

“A lot of companies, fearing about the systemic risk, have been delaying investments for a long time. But now that this risk is gone, you could well see a sudden catch-up in capital expenditures as the companies put their cash to work,” said Gilles Guibout, head of eurozone equities at AXA Investment Managers, which has €554 billion under management.

With domestic demand weak, European companies have been looking abroad for profit growth, but that is now starting to be eroded by the strong euro exchange rate.

Dutch staffing firm Randstad, Swiss engineering group ABB, French car marker Renault and drinks giant Pernod Ricard climbed as much as 7.7 per cent after all four firms reported solid growth outside Europe.

But cruise ship operator Carnival fell 2.9 per cent after flagging earnings would be knocked up to 10 cents a share by the impact of voyage disruptions and related repair costs, prompting Oriel to cut its forecasts.

Pharmaceutical company Shire fell 5.5 per cent, hit by profit taking after reporting a rise fourth-quarter earnings. (Reuters)