European shares slipped yesterday to finish lower as a worsening consumer mood in the US rattled the market and wary investors awaited further corporate results after oil major BP let them down.
But news that telecom equipment maker Ericsson would buy most of its British rival Marconi supported demand for tech and telecom stocks, limiting the decline.
European shares were weighed down as oil prices climbed back above $61, adding to inflation concerns and fears for corporate profits as the third-quarter reporting round gains momentum.
The climb in the crude price helped oil producers and BP recovered some of the ground it lost after news it had refining and production problems following the US hurricanes, although its quarterly profits soared.
The pan-European FTSEurofirst 300 index closed unofficially down 0.23 per cent at 1,182.5 points, after Monday's one per cent gain, but still off around four per cent from a 41-month high struck this month. Wall Street was weaker.
BP fell 1.2 per cent.
Other blue-chip losers included cosmetics firm L'Oreal, which disappointed with lagging sales in the previous session, and electronics group Siemens, which had been rumoured to be vying with Ericsson for Marconi. L'Oreal fell 2.9 per cent and Siemens was down one per cent.
Paris's CAC-40 and Frankfurt's DAX shed 0.6 per cent. The UK's FTSE lost 0.5 per cent.
European share indexes had opened higher and traded unchanged for much of the day but turned weaker after the US Conference Board said the index of consumer confidence sentiment in October fell to 85 from September's 87.5, still weighed down by the hurricanes, high gasoline prices and uncertainty over jobs.
"In many ways traders were going to find a positive interpretation of this number difficult, but a fall over the September figure - against forecast predictions of a small rise - has underlined a genuine weakness in the US economy, in turn weighing on stocks," said Jimmy Yates, CMC Markets trader.
"After the disappointing numbers from BP this morning, earnings from miners Antofagasta and BHP Billiton and Shell will all come under close scrutiny," Mr Yates said in a note.
Investors are watching company reports for guidance on how high energy costs, hesitant consumers and rising interest rates are affecting revenues and earnings.
Monday's news from the world's largest tyre maker, Michelin, that it has reduced its full-year profit outlook dulled investor appetite for auto shares. Michelin was among the biggest decliners in Europe, falling 7.7 per cent.