European shares flirted with their recent 28-month high yesterday as a higher dollar lifted autos and other sectors selling into the big US market, but bourses lost steam late in the day as Wall Street turned lower.

However, gold trading near 16-year highs and a rally in copper boosted mining groups like Anglo-American.

The FTSEurofirst 300 index closed unofficially up 0.02 per cent at 1,028.85 points, shedding nearly all of the day's gains that had taken the pan-European benchmark to just a few points short of its mid-November 28-month high of 1,040.55.

The greenback, a major influence on European export earnings, held above last week's record low against the euro after ten consecutive weeks of losses.

"It's been such a one-way call on the dollar for so long with everybody suggesting it's going to get weaker that it looks oversold," said Kevin Lilley, a fund manager at Royal London Asset Management.

The currency's fundamentals were still bad, he added. Dealers said investors were nervous about being left out of a possible year-end rally, and were keeping an eye on Friday's US employment report.

On the downside, shares in Credit Suisse dropped 2.3 per cent to 45.3 Swiss francs after a Swiss newspaper said on Sunday the bank has no immediate plans to sell its Winterthur insurance division to raise cash.

Crude oil prices edged up to dampen enthusiasm in shares, as did a slide in the world's top retailer Wal-Mart after the owner of UK supermarket chain Asda recorded disappointing Thanksgiving sales.

European peers such as Ahold and Delhaize also eased.

The DJ Euro Stoxx 50 index closed unofficially down 0.17 per cent at 2,894.15 points.

"We are already in the market and hoping for a small rally to the end of the year based on valuations still looking cheap, and generally new money coming in," Mr Lilley said.