European stocks gave up early gains yesterday afternoon, taking their lead from weakness on Wall Street despite HSBC surging to a 13-month high after a rise in profits at the world's second largest bank.

Energy companies were in favour after a late surge in crude oil prices on Friday but British coal and zinc miner Xstrata pushed basic resources stocks lower after it issued $600 million in convertible bonds.

Across the Atlantic, US stocks opened lower and were unmoved by stronger-than-expected economic data.

Factory orders rose 1.7 per cent in June versus expectations for a 1.5 per cent rise and a 0.4 per cent gain the previous month and US durable goods data rose 1.7 per cent following a 2.1 per cent rise in May.

"I think there have been a couple of dodgy numbers in the last couple of weeks but most of them are pointing to the fact that we are past the worst and possibly heading to recovery," said Citigroup European economist Darren Williams.

By 1402 GMT, the FTSE Eurotop 300 index of pan-European blue chips was flat at 872 and the narrower DJ Euro Stoxx 50 index was also at break even at 2,479.

Both indices have risen sharply since mid-March but have been constrained in narrow ranges since June while investors digest a feast of corporate earnings and look for confirmation of a rebound in global growth.

"If we are going to have a recovery, which we do think we are, that would be supportive for equity prices. Probably what (equity markets) need to move up from here is some more hard data evidence," Citigroup's Williams said, adding that labour market data remained a dull spot.

In New York, the Dow Jones industrial average was down 0.7 percent at 9,088 while the technology-heavy Nasdaq Composite Index also dipped 0.7 percent to 1,704.