European equities ended slightly lower yesterday, as signs of resilience in US retail sales was not enough to eclipse inflation fears that hit UK stocks, while banks fell on renewed concerns over asset writedowns.
France's biggest retail bank Credit Agricole tumbled 5.6 per cent after unveiling a capital increase of €5.9 billion following more subprime-related write-downs.
The FTSEurofirst 300 index of top European shares closed 0.03 per cent lower at 1,346.08 points, with the DJ Stoxx banking index down 0.4 per cent.
Wal-Mart Stores Inc's disappointing outlook also weighed on the market. While the retail giant reported stronger-than-expected earnings, it said results for the current quarter could miss analysts forecasts, citing a tough economic environment as well as higher transportation costs.
Energy stocks lost ground, surrendering some of their recent hefty gains, as US crude oil futures hovered around $124 a barrel, easing from a record high of $126.40 touched on Monday.
Repsol YPF lost 0.7 per cent, Royal Dutch Shell shares traded in Amsterdam shed 1.2 per cent, and gas producer BG Group lost 3.7 per cent.
Shares of mining companies rose, with Rio Tinto gaining 3.7 per cent as traders cited market talk that rival BHP Billiton could sweeten its takeover offer for Rio. BHP declined to comment. The company's stock gained 1.4 per cent. Stocks got a boost when the US Commerce Department released data showing total sales at US retailers weakened modestly in April, but outside the hard-pressed auto sector they showed more resilience than many analysts had anticipated.
"When you strip out auto sales, the figure comes better than expected. The market seems to see in the data some sort of positive signal, but I don't think it's a green light to buy stocks," said Yann Lepape, Chief Global Macro Strategy at Oddo Securities, in Paris.
"You can strip out all the sectors you want to get the number you want, but the bottom line is that overall sales are still in a downward trend, and the macro backdrop remains the same: consumer spending is losing steam," Mr Lepape said.