European shares headed lower yesterday as a cautious outlook from mobile phone giant Nokia outweighed further data suggesting the recovery in the United States was gathering pace.

Highlighting the choppy nature of trade surrounding the start of the third-quarter earnings season, investors sold the cyclical, technology and basic industry stocks they bought on Wednesday.

A softer start on Wall Street ensured European stocks remained in the red, despite a largely-as-expected series of data on the US economy.

Weekly jobless claims, business inventories for August and September industrial production showed the world's largest economy was improving, albeit slowly.

"Most of the data seems to be consistent with a scenario of good growth in the third quarter although we do see the prospect of a slight slowdown in the fourth-quarter," said Richard Reid, an equity economist at Citigroup in London.

By 1354 GMT, the FTSE Eurotop 300 index of pan-European blue chips was 0.7 per cent weaker at 916 points while the narrower DJ Euro Stoxx 50 index fell 0.9 per cent to 2,548.