European shares eased off three-year highs yesterday as a rise in crude oil prices to above $55 a barrel fanned worries that company profits and consumer spending would suffer, but lifted oil majors led by Statoil.
Action in construction and banking stocks slowed after gains on the back of merger and acquisition speculation on Monday, when the shares had jumped on news of Italian bank Unicredito's bid for Germany's HVB and a takeover offer for Heidelberger Cement from Germany's Spohn.
At 1024 GMT, UniCredito had firmed a slight 0.2 per cent. HVB nudged up 0.1 per cent, but Commerzbank gained a larger 1.4 per cent after a German newspaper quoted a source close to the top management as saying it was looking for possible partners.
The share pared early gains which had taken it to a three-year high after Commerzbank declined to comment on the report.
Lehman Brothers cut its view on UniCredito to "equal-weight", setting a share price target of €4.40.
The broad FTSEurofirst 300 index eased 0.2 per cent to 1,133.56 points. The narrower DJ EuroSTOXX 50 shed 0.1 per cent at 3,157.49 points.
"I would not underweight German banks at this point because of the M&A possibilities," said European strategist Lars Kreckel at ABN AMRO, who has a "neutral" view on the German sector.
As for the pan-European banking sector, he is "underweight".
"For capital markets banks, the operating environment has worsened, the trading environment got more difficult," he said.
"The takeover of HVB shows the German banking scene seems to be more attractive to foreign investors than we thought," said analyst Philipp Haessler at broker equinet in Frankfurt. He put the chance for a Commerzbank takeover at 30 per cent.
Deutsche Bank shed 0.3 per cent with some traders citing worries that takeover plans, voiced Chief Executive Josef Ackermann in a German newspaper, could involve a cash call.
Ackermann told Handelsblatt he still saw the strategic sense of a merger with Deutsche Postbank.
Postbank said a merger with Deutsche was "absolutely not an issue". But Postbank shares still gained 0.8 per cent. The leading DAX-30 index shed 0.2 per cent.
In the building sector, Heidelberger Cement held steady at 59.74 euros, just below the €60 offered by Spohn Cement. But Hanson fell 1.7 per cent as Monday's bid speculation, after the offer for Heidelberger Cement, unwound.