European shares ended lower yesterday, breaking a three-day winning streak, as weaker techs and telecoms offset the impact of surprisingly robust US service sector figures.
The pan-European FTSEurofirst 300 index of top European stocks ended down 0.25 per cent at 1,357.99 points. With UK markets closed for a public holiday, volumes were thin.
Tech stocks weighed after Microsoft walked away from a bid for Yahoo. Chip equipment maker ASML lost 2.3 per cent, and in the telecom sector, Alcatel-Lucent, Ericsson and Nokia fell 1.1-1.9 per cent.
Stocks got a brief fillip from data that showed the US service sector grew in April for the first time in four months, adding to signs that the US might skirt a recession.
But oil hitting a record above $120 a barrel weighed on the broader market.
Investor focus moves to a heavy earnings day today, when Swiss bank UBS, among the lenders worst hit by a global credit crisis, is expected to report a big first-quarter loss.
"The earnings season has been mixed with some pronounced positives and some negatives. All in all one might say the earnings development has not been as bad as one feared, given the macro backdrop," said Tammo Greetfeld, strategist at UniCredit in Munich, Germany.
"But the combination of the outlook statements and the expected macro data should not be good enough to give equity markets a lasting positive stimulus from current levels," he added.
The FTSEurofirst has lost nearly 10 per cent this year as banks unveiled massive writedowns linked to the credit crisis, but the index staged a rally in April, recording its best month since October 2003 on hopes that the worst was over for financials.
Across Europe, Germany's DAX ended up 0.1 per cent and France's CAC down 0.1 per cent.
"We had a pretty solid rally on Friday on the back of the jobs data, and with London off today, volumes are very low as nobody is willing to build any position," said Chicuong Dang, equity analyst at Richelieu Finance, in Paris.
Defence and aerospace group EADS was among the biggest laggards, falling nearly four per cent after German media reported that Airbus could run into problems selling some of its factory sites and could be forced to further delay some deliveries on its A380 superjumbo.
The reports said EADS would have a board meeting today to decide whether or not to proceed with the sale of factory sites. A source close to the matter said that no such board meeting was planned.
Deutsche Telekom fell 1.5 per cent after Der Spiegel magazine and other media reported the company was looking at a possible purchase of US wireless company Sprint Nextel. Sprint Nextel jumped five per cent in New York.
German logistics group Deutsche Post topped German gainers with a 2.9-per cent rise following an upbeat first-quarter update.