A fourth day of declines by oil companies scuppered European shares yesterday, as did a nerve-jangling wait to see how the Federal Reserve will present its first US interest rate hike in four years.
Healthcare also wobbled as Europe's biggest drug maker GlaxoSmithKline slid after Commerzbank Securities cast doubt on whether its much anticipated cancer drug lapatanib will live up to its multibillion-dollar promise.
Glaxo shares dropped 2.3 per cent to 1,116 pence. The final day of trading in the first half of 2004 was also soured by an unexpectedly sharp drop in US Midwest manufacturing activity last month due to an auto sales slowdown, just as interest rates are due to go up.
But technology was buoyed by an advance in top mobile phone maker Nokia, whose shares rose 1.5 per cent to €11.8 after investment bank Goldman Sachs said there was a glimmer of hope for the Finnish handset maker after a profit warning in April.
And Franco-Italian chipmaker STMicroelectronics was up 2.4 per cent at €18 after confirming it was in talks with Korean peer Hynix to set up a joint venture.
The FTSE Eurotop 300 index closed down 0.8 per cent at 998.28 points, with three shares falling for every two that rose in average volume of €2.5 billion.
The narrower DJ Euro Stoxx 50 index ended down 0.6 per cent at 2,811.08 points.
The Fed's Federal Open Market Committee (FOMC) is widely expected to increase US borrowing costs by 25 basis points when its two-day meeting ends around 1815 GMT.
But investors are more interested to hear what the Fed has to say about the outlook for the US economy and other hints on the timing and pace of further rate hikes.
"I doubt if tonight will change things very much as people want to see what the pattern will be," said John Hatherly, head of global analysis at M&G Asset Management.
The outlook for rates will have a bearing on the second half of 2004 for investors as the first half ends with the Eurotop 300 index ahead a modest 4.2 per cent.
Greater gains during the six months were whittled down by concern over US interest rates, security, violence in Iraq and how well a cooling of the Chinese economy would be handled.
"I don't see a general run in the market in the second half. It may be modestly better again," Mr Hatherly said. Easy sector choices may be few in the second half.
"It's not going to be an easy market. There is quite a lot of value but you have to dig around for it, but there will be slightly less uncertainty in the second half. It's very much a stock picker's market," Mr Hatherly added.