European blue chips pared their gains yesterday afternoon after a slump in US consumer confidence highlighted the fear of economic softness that has dogged investors all year.

Wall Street turned lower after news that the US Consumer Confidence Index dropped to 80.3 in December from a revised 84.9 in November. A slight rise to 85.5 had been forecast.

The consumer accounts for two-thirds of US economic activity and is key for keeping recovery on track as companies still refrain from capital spending.

By 1505 GMT, the FTSE Eurotop 300 index of pan-European blue chips was 0.6 per cent firmer at 856 points, off the day's high of 858.88, though volume remained thin with only Paris and Amsterdam among the leading markets still trading ahead of New Year's Day.

On Wall Street, the Dow Jones industrial average was down 0.5 per cent at 8,290 points, while the Nasdaq Composite shed 0.4 per cent to 1,334 points.

Among the day's few standout shares, European drug leader GlaxoSmithKline rose 3.9 per cent to 1,192 pence, extending Monday's gains when the group reaffirmed its earnings guidance and a court ruling fuelled hopes it could head off potential rivals to one of its top-selling drugs, anti-depressant Paxil.

Oil producer Royal Dutch/Shell fell 0.7 per cent in Amsterdam as crude oil prices slumped nearly 3.5 per cent as promises of extra OPEC supply drained strength from a rally which added 50 per cent to the cost of oil in 2002.

The Eurotop 300 is set to end 2002 down about 33 per cent - its third successive year of losses. Prices have been dented by dismal company earnings, sluggish economic growth, US corporate scandals, a soaring crude price and geopolitical tensions involving Iraq and North Korea.