Solid US industrial production data helped European equities trim earlier losses yesterday afternoon as it added to evidence of an economic upturn, but Cap Gemini was a sore spot after issuing a profit warning.

Dutch publisher VNU pleased markets with forecasts of 2003 earnings at constant currencies coming at the high end of its previous guidance and news that it would maintain its dividend.

The Federal Reserve Board reported US November industrial output rose 0.9 per cent, compared to a 0.4 per cent rise in October and beating forecasts of a 0.5 per cent increase.

"The data exceeded our expectations, showing the baton of strong growth has been passed from the consumers in the third quarter to the producers in the fourth quarter," said Paul Mortimer-Lee, chief capital markets economist at BNP Paribas.

"The capacity utilisation still remains low, but what we are seeing is that the sector is moving in the right direction, a development markets had been waiting for for months."

By 1445 GMT, the FTSE Eurotop 300 index was off 0.3 per cent at 937 points, while the DJ Euro Stoxx 50 index shed 0.1 per cent to 2,695 points.

Volumes amounted to a lighter-than-usual €1.6 billion as more investors closed their portfolios, booking their profits after a nine-month rally hoisted markets nearly 40 per cent above mid-March's lows and equity markets looked set for their first annual returns in four years.

A report showing an unexpected 0.2 per cent fall in the November US consumer price index received mixed reactions, as while it seemed to delay the possibility of a rate rise by the Federal Reserve any time soon, it also showed that companies continued to struggle against downward pressure on prices.