European shares ended at new two-week lows yesterday as TV broadcasters fell after Germany's ProSiebenSat cut its 2004 market growth target, while growing fears about a US lawsuit pounded insurers.

Oil prices flirting with $55 a barrel also sapped sentiment as investors feared soaring energy costs could make it more difficult for companies to produce the kind of profit margin growth that investors have priced into share valuations.

Crude prices dropped sharply after European markets had closed though, after the OPEC oil cartel cut its estimate of expected oil demand growth for next year.

The cartel's comments helped the US crude price recede to $53.20 a barrel and helped Wall Street turn positive.

The FTSEurofirst 300 index of pan European blue chips ended off 0.3 per cent at 992.1 points, extending to nearly three per cent its decline from a five-month intraday high of 1,021.15 points hit on October 7. The narrower DJ Euro Stoxx 50 index was down 0.17 per cent at 2,768.6 points.

Drug maker Elan bucked the weaker trend, its shares up 5.6 per cent despite the Irish firm dismissing a weekend report that US peer Biogen Idec was considering a friendly bid for it.

Opinions diverged on the impact that record-high energy costs could have on corporate profitability and consumer spending, with some market watchers forecasting that lower economic and earnings growth in the quarters to come provided a negative backdrop for equity markets.

But others said that, although negative, costlier oil prices did not call into question growth prospects and that equities should remain supported.

"Even with oil at $55 a barrel, we still see scope for companies and investors to make money," said strategist Anais Faraj at Nomura. "The key issue now is... focusing more on the acute mismatch between depressed valuations and still reasonable growth prospects."

A slew of US earnings, including IBM and Texas Instruments, and sales and profits from European blue chips such as L'Oreal, Electrolux, Sanofi-Aventis and SAP will be eyed for clues on how companies gauge the business environment.