European shares drifted lower yesterday, with falls in the automobile and commodities stocks outweighing stronger banks that advanced after Warren Buffett invested $5 billion into Goldman Sachs.

At 1139 GMT, the FTSEurofirst 300 index of top European shares was down 0.1 per cent at 1,107.28 points after trading in a range of 1,106.35-1,116.45.

Banks were the top weighted gainers on the index, with UBS, Royal Bank of Scotland, Societe General, BNP Paribas and Credit Agricole rising between 1.2-5.5 per cent. Billionaire Warren Buffett bet on a Wall Street revival by buying a $5 billion stake in Goldman Sachs and a Japanese bank looked ready to follow, but markets were on edge as US lawmakers clashed over a financial sector rescue.

Japan's third-largest bank, Sumitomo Mitsui Financial Group , also plans to invest in Goldman, Japanese media reported yesterday. A spokesman at Sumitomo said no decision had been made.

Architects of the proposed $700 billion bailout for financial firms faced a second day of grilling by US lawmakers yesterday as the debate threatened to delay a decision until next week.

Some analysts were sceptical on Buffett's move to buy a stake in Goldman Sachs.

"The market is really going sideways. Warren Buffett is not enough to turn the economy around," said Tom Hougaard, chief market strategist at City Index.

"No one wants to be heavily invested," he added.

French utility EDF gained 3.7 per cent. The company said it launched a £12.5 billion (€15.8 billion) agreed bid for nuclear operator British Energy, in a revamped offer to take control of Britain's nuclear power industry. EDF, the world's top maker of nuclear energy, said it was offering 774 pence per British Energy share. It also proposed an alternative of 700 pence in cash plus one nuclear power note, a financial instrument linked to BE's future performance.