European stocks fell to their lowest in two weeks by mid-session yesterday as interest rate fears and a continued slump in oil prices took a toll on global equity markets.

By 1143 GMT, the FTSEurofirst 300 index of top European shares fell 0.8 per cent to 1,475.26 points, its lowest level since December 27.

Strategists expect the index to fall in the coming weeks after it hit a near six-year high in 2006.

Crude oil was down 83c to $54.82 a barrel, threatening a repeat of the previous session's rout - sparked by a warm US winter and aggravated by a shift in investment fund money - that took prices to a 19-month low. "Markets will go down in the first quarter due to uncertainty about the US economy and the interest rate policy. In addition, earnings growth will slow down," Marco Bargel, chief economist at Postbank, said.

"In the second half, we expect a recovery," he said.

A Frankfurt trader agreed: "This is a healthy correction with no reason to become nervous."

Among major national indexes, Britain's FTSE 100 slipped 0.6 per cent, while Germany's DAX fell 0.8 per cent and France's CAC 40 slid 0.7 per cent.

Among technology stocks, Nokia lost 2.2 per cent while Ericsson dropped 0.9 per cent, tracking a drop in Asian phone makers such as Samsung on worries that the handset companies would struggle to cope with Apple's new mobile phone.