European shares closed lower yesterday, dropping for a second consecutive day, as higher mining stocks failed to offset weak US macroeconomic data that showed an unexpected fall in housing started last month.

The FTSEurofirst 300 index of top European shares ended down 0.3 per cent at 1,027.16 points, having hit a fresh 13-month high earlier in the trading session.

The index, which slumped 45 per cent last year, is up 24 per cent in 2009 and has surged 59 per cent since hitting a record low in March.

Across Europe, Britain's FTSE 100 index was 0.1 per cent lower, Germany's DAX gained 0.2 per cent and France's CAC 40 fell 0.02 per cent.

The US Commerce Department said housing starts fell almost 11 per cent to a seasonally adjusted annual rate of 529,000 units, the lowest level since April.

"Building permits from the United States were weaker than expected, but the impact was not as bad as it could have been," said Joerg Rahn, chief investment officer at wealth management company Marcard, Stein & Co.

"However, on a more general note, it is truly remarkable how unimpressed markets are at the moment.

No matter whether macro data are good or bad, it seems to be shrugged off to some extent," he added. Mobile telecommunica-tions stocks took most points off the index and the DJ STOXX European Telecom Index was 0.8 per cent lower, with Vodafone, Cable & Wireless and Deutsche Telekom down 0.6 to 3.4 per cent. Vodafone also traded ex-dividend.

On the upside, mining stocks added most points to the index, and the DJ STOXX European Basic Resources Index was up 1.1 per cent.

The index has soared 94 per cent so far this year, the best sectoral performance, dwarfing a 57 per cent gain in the DJ STOXX European Banking Index in the same period.

Rio Tinto, BHP Billiton, Arcelor-Mittal, Xstrata and Antofagasta all gained between 1.6 and 4.8 per cent.