European shares limped to their sixth lower close in a row yesterday, ending a week that wiped out most of this year's gains as question marks over economic recovery triggered a rethink of stock valuations.
Technology leader, Finnish handset maker Nokia, bucked the downward trend to rise 0.9 per cent to €13.3 after unveiling a company revamp which some analysts saw as grooming a possible successor to the chief executive.
Oil shares like BP and Royal Dutch skidded as markets bet the impact on oil prices of an Opec production cut will be blunted by supplies from countries like Iraq.
But Spain's CEPSA leapt 17 per cent to €28.05 after Spanish bank SCH made a surprise €1.2 billion cash bid to raise its stake in the oil firm to just over a third.
Dutch insurer ING fell 2.8 per cent to €16.2 after investment bank JP Morgan cut its rating on the stock.
By 1552 GMT, the FTSE Eurotop 300 index was off 0.8 per cent at 881 points and poised for its worst close in a month and a half, with more than two shares falling for each one advancing in relatively good volume.
The pan-European blue-chip benchmark was down 3.7 per cent for the week, and 5.3 per cent below the eight-and-a-half month high it reached in early September, leaving it up just 2.8 per cent for the year after rallying by more than a third from March's six-year low.
Fund managers said data indicating economic recovery is patchy, the weak dollar's negative impact on European export revenues, and oil price gyrations have helped trigger a long-awaited stocks correction after a hefty rally.
"I don't think we will fall back into a bear market again, but all this fits perfectly into the pattern of two steps forward and one step back," said Gert Jan Geels of Eureffect asset management in Amsterdam.
"We have a feeling we have become overvalued a bit after the second quarter results which showed there could be light at the end of the tunnel. Also the dollar was dropping, oil prices rising and the market due to correct sometime," he added.
The DJ Euro Stoxx 50 index shed 0.7 per cent to 2,447 points. Across Europe, London fell one per cent to close below the key 4,200 point level, while Paris dropped 0.4 per cent and Frankfurt was down 0.25 per cent.
"The breakdown has begun which should have begun a month earlier," said Tom Hougaard of City Index financial spread betters in London.
"This is a very dangerous time in the market because if we start the new quarter next week with weakness, it is likely to prevail well into November," Mr Hougaard said.
Wall Street also struggled as a stronger-than-expected 3.3 per cent second quarter growth rate in the US economy was countered by an unexpected fall in US consumer sentiment in September due to persistent weakness in the job market.
British retailers were a focus after Britain gave family-run William Morrison Supermarkets a clear run to buy rival Safeway, blocking bids from larger chains and curbing their dominance.