Worries about economic and earnings growth and a lower opening on Wall Street pulled European stocks down yesterday afternoon, but energy stocks were buoyed by a broker upgrade and rising crude oil prices.

Oil stocks climbed, with Britain's BP and Shell each tacking on nearly two per cent after JP Morgan upgraded the European energy sector to "overweight" from "underweight" and crude oil prices rose on supply concerns.

"We see potential for upside earnings surprises," said JP Morgan analyst Walter Kemmsies. "Energy is the only European broad sector where earnings are expected to decline in 2004 against 2003."

For the second day running bank stocks were among major losers after Britain's second-biggest mortgage lender Abbey National posted a 2003 pre-tax loss of 686 million pounds - nearly five times the loss expected by analysts.

Abbey National tumbled 13.6 per cent. Germany's second-biggest bank HVB shed 2.7 per cent after it confirmed plans to raise at least three billion euros in a rights issue to absorb write-downs on investments that pushed it to its worst ever loss last year.

By 1505 GMT, the FTSE Eurotop 300 index, an index of pan-European blue chips, was down 0.30 per cent at 1,004.46 points, down from a session high of 1,011.05. The narrower DJ Euro Stoxx 50 index lost 0.12 per cent at 2,868.96.

European stocks opened up, hovering around the 1,010 mark for most of the morning session, but US durable goods data for January, down 1.8 per cent, saw the market lose confidence.

Economists had expected a rise of 1.4 per cent from a revised rise of 1.6 per cent in December.

"The headline durable goods number was weak, but these numbers are volatile," said Matthew Wickens, economist at ABN AMRO. "If you strip out the volatile items like transport the numbers actually look quite good."