European shares retreated for the second straight day yesterday as wary investors sold technology and telecoms stocks in favour of more defensive sectors such as oil and consumer staples.
Anglo-American, the world's third largest diversified miner, was a top blue-chip decliner, shedding 4.1 per cent as the stock went ex-dividend.
Europe's largest phone carrier, Deutsche Telekom fell two per cent after a problem-plagued road toll system it is helping to develop pushed the group to a fourth-quarter net loss.
Britain's Royal Bank of Scotland and peer HBOS also dragged on the broader market as they went ex-dividend but oil stocks, food and beverages found favour as the appetite for risk diminished.
By 1436 GMT, the FTSE Eurotop 300 index of pan-European blue chips was 0.4 per cent lower at 1,011.4 points while the narrower DJ Euro Stoxx 50 index fell 0.3 per cent to 2,915.1 points.
Stocks most highly exposed to the economic revival and those rebounding after hefty restructuring led the rally of 2003 but Credit Suisse First Boston said revenue momentum would be a critical factor for stocks for 2004.
"Within Europe, the best revenue momentum has been in software, banks, capital goods and tech hardware, while the worst has been in media and pharmaceuticals," CSFB said in a note.
"We look for stocks with positive revenue and earnings momentum that look cheap on implied growth rates and are cautious of stocks with negative revenue and earnings momentum that look expensive on implied growth rates."
In New York, the blue-chip Dow Jones industrial average was 0.1 per cent firmer at 10,462.2 points, while the Nasdaq Composite Index rose 0.2 per cent to 1,999.8 points.
Data showing the US trade deficit widened to a record $43.1 billion in January was largely shrugged off as investors looked ahead to US data on jobless claims, retail sales and consumer sentiment later in the week.
The dollar was initially knocked by the data but quickly recovered, while oil prices remained firm after top exporter Saudi Arabia cut supplies.
SG Equity Research said it was upgrading the European oil sector to 'neutral' from 'strongly underweight'.
"After underperforming significantly, the sector no longer shows a premium in its rating relative to the oil price or to market valuation," SG said, rating Italian major ENI as its top pick in the sector.