European shares lost steam yesterday after news the US economy grew at a slower pace than expected, raising concerns about consumer spending, the lynchpin of recovery.
By 1520 GMT, the FTSE Eurotop 300 index was off 0.15 per cent at 985 points, heading for its first down week in seven weeks.
Markets could trade sideways until the end of next week when more economic news is due, said Steve Barrow, a strategist at Bear Stearns investment bank.
"The market is getting finicky ahead of a potential double whammy at the end of next week with the US payrolls data and the G7 meeting," Mr Barrow said.
Next Friday US non-farm payrolls are due, and finance ministers and central bankers from the seven richest nations meet in Florida amid concern about the dollar's slide.
Among the standouts, Novartis fell 2.3 per cent on a report the Swiss drug group may become a "white knight" to rescue French peer Aventis from a hostile bid from domestic rival Sanofi-Synthelabo.
Swiss staffing firm Adecco said its accounting woes were not a major issue and that its results or finances would not suffer, pushing its shares 14 per cent higher to 66 Swiss francs.
Telecoms equipment makers such as Ericsson, Alcatel and Marconi rose on the back of an upbeat earnings report from Canadian peer Nortel Networks.
And Anglo-Swedish drug group AstraZeneva was buoyed when brokers raised their stock price forecasts a day after the company reported earnings.
The benchmark index that tracks Europe's top 300 shares is up about three per cent so far this year, extending last year's rally. It hit a near 17-month high last week, leading many analysts to predict some consolidation.
The DJ Euro Stoxx 50 index shed 0.3 per cent to 2,850 points yesterday.
On Wall Street, the Dow Jones industrial average was off 0.3 per cent at 10,478 points, while the tech-studded Nasdaq Composite gained 0.5 per cent to 2,078 points.
US gross domestic product grew at an annualised rate of four per cent in the fourth quarter, short of the 4.8 per cent economists had expected, with some "whisper" forecasts close to 6.0 per cent.
Consumer spending, which accounts for two-thirds of activity, rose at a 2.6 per cent pace in the fourth quarter, a sharp slowdown from the heady, tax-cut-induced 6.9 per cent gain of the prior three months.
But the Chicago Purchasing Management index jumped to 65.9 this month, its highest level since July 1994. It is seen as a precursor for the influential Institute of Supply Management index of business activity due on Monday.
Concern remains that the recovery is not creating enough new jobs to keep consumers spending.
"It's all a bit of a mixed bag. Even though the Chicago figure was well above expectations, the employment component was not particularly strong. Jobs are the key, and the Chicago figure did not suggest much was happening there as the optimists would have us believe," Mr Barrow said.
Meanwhile, the French stock market's first company debut in more than a year was marked by a 29 per cent leap in the shares of internet firm Iliad, a sign that investor appetite for dotcom names is coming back.