European shares trimmed some of their losses yesterday afternoon after a steady US consumer confidence figure, but investors remain cautious as the Federal Reserve deliberates on interest rates.
French utility Suez, Anglo-Dutch food group Unilever and Finnish forestry groups continued to exert downward pressure.
There was a flurry of activity when the US consumer confidence index for June was unveiled, showing a smaller-than-expected dip to 83.5.
"They are slightly ahead of expectations. That is nice and you can look at it and celebrate, but we had a range (of forecasts) that was relatively wide," said Matthias Joerss, equity strategist at private bank Sal. Oppenheim in Frankfurt.
"To me the number that was way more important was the weak (business confidence) number from Belgium," Joerss added.
The Belgian leading indicator of business sentiment - seen as a barometer of the wider euro-zone economy - sank in June to its lowest level since January 1993 due to a struggling manufacturing sector.
By 1428 GMT, the FTSE Eurotop 300 index was off 0.4 per cent at 857 points. The benchmark is struggling to regain momentum amid concern the market has got ahead of itself as companies like Unilever stoke earnings concerns.
The DJ Euro Stoxx 50 index was up 0.3 per cent at 9,099 points, and the Nasdaq Composite dropped 0.2 per cent to 1,607 points. Among the day's standouts in Europe, Suez sank 8.4 per cent to 13.59 euros as brokers cut their forecasts for the utility amid market talk, denied by the company, that it had guided down 2003 earnings expectations.
Unilever fell 3.5 per cent at 45.98 euros, pushed to a low for the year by a wave of analysts' downgrades after Monday's shock sales warning.
Forestry firms Stora Enso and UPM-Kymmene sank up to six per cent after a warning from South African peer Sappi, which said late on Monday that third-quarter earnings would be half of that achieved in its prior quarter due to tough trading conditions.
Belgian brewer Interbrew shed 6.8 per cent to 17.87 euros as investors were nervous ahead of the group's trading update today after peer Heineken gave a gloomy outlook yesterday.
On a better note, France Telecom rose 2.8 per cent to 20.37 euros after its mobile phone operating unit Orange set itself ambitious growth targets. Orange shares rose 1.5 per cent to 7.48 euros.
Dealers said many investors were hunkering down as the Federal Reserve kicked-off a two-day meeting.
The US central bank is expected to cut interest rates but there is no market consensus on whether it will be a quarter or half percentage point reduction.
Wednesday's Ifo index of German business sentiment in June will also be eagerly awaited. It is forecast to show only a slight rise from May, reflecting the ongoing stagnation in Europe's biggest economy.