European shares slipped back from a 10-month closing high yesterday, as investors took profits, even as German and US economic data continued to point to recovery.
The pan-European FTSEurofirst 300 index of top shares fell 0.5 per cent to close at 973.92 points, breaking a four-day winning streak, and having hit its highest close since early October on Tuesday.
The European benchmark index is still up 50.9 per cent from its lifetime low of March 9, as investors have become more confident on the prospects of recovery.
"The market has come a long way, and the economics are still supportive," said Georgina Taylor, equity strategist, Legal and General Investment Management.
"We're just seeing a little profit taking. Nothing has been derailed. Housing data is improving. The only area of concern is consumer spending."
Energy companies were the biggest drag on the index, with crude prices CLc1 down more than one per cent to just above $71 a barrel, after the US Energy Information Administration said inventories had risen. BG Group, BP, Repsol and Total were between 0.9 and 2.3 per cent lower.
UK-based oil explorer Tullow Oil fell 3.9 per cent after it said interim profits dropped 83 per cent on lower oil prices and production. Other economics news was mostly upbeat. Sales of newly built US single-family homes rose in July to their fastest pace in 10 months, while orders for long-lasting manufactured goods surged, hinting a modest economic recovery was taking shape. However, some investors chose to focus on orders excluding transportation climbing slightly less than forecast.
Back in Europe, the business climate index of Germany's Ifo, a Munich-based think tank, rose to 90.5 from an upwardly revised 87.4 in July. "The Ifo figures did not have a momentum effect, despite them being very good. But one also has to acknowledge that the markets are moving on high levels and that people may be following the strategy of 'selling on good news'," said Joerg Rahn, chief investment officer at wealth management company Marcard, Stein & Co.
Miners also fell. Copper miner Antofagasta lost 4.8 per cent after it posted lower-than-expected earnings in the first half and warned prices were likely to remain volatile in the second half.
BHP Billiton, Xstrata, Anglo American and Rio Tinto were down 1.4 to 4.1 per cent.
Among individual movers, French bank Natixis soared 38.8 per cent after majority owner state-backed BPCE said it will guarantee roughly €35 billion worth of toxic assets at the investment bank.
Alcatel-Lucent surged 11.9 per cent as traders cited market talk of a possible bid from a Chinese manufacturer of telecom gear and a rating upgrade by Natixis.
Heineken, the world's third-largest brewer, rose 7.2 per cent, after reporting a rise in first-half operating profit, driven by cost savings, beat forecasts. Guinness maker Diageo rose 2.6 per cent, ahead of full-year results today.
Suez Environnement soared 11.5 per cent after the French utility group reported forecast-topping first-half profit despite a sharp drop in waste business. However, GDF Suez, the French electricity and gas group, fell 1.7 per cent, ahead of first-half results today.