European stocks edge lower as BP, techs waver

European share indexes ended slightly lower yesterday as weak energy and technology stocks offset swirling takeover talk on companies such as VNU and a stronger than expected US consumer confidence reading.

Shares in Marks & Spencer and other British retailers lent some support amid hopes of strong pre-Christmas sales, but this was not enough to put the overall market in positive territory as index giant BP shed 1.7 per cent after Kuwait sold 185 million of its shares for around $2 billion.

A fresh surge in crude prices to $60.65 a barrel failed to lift BP shares but unnerved investors wary of inflationary pressures that could force central bankers to continue tightening monetary conditions.

By 1640 GMT (5.40 p.m., local time) the pan-European FTSEurofirst 300 index was 0.07 per cent weaker, closing unofficially at 1,265.65 points, which was 0.6 per cent below a three-and-a-half year intra-day high set on Wednesday and barely changed for the week. The blue chip index has rallied more than 20 per cent since the start of the year, underpinned by robust earnings, low interest rates and a weakening of the euro against the dollar that has supported the region's exporters.

But many observers fear conditions will become more difficult for equities next year as higher oil prices and interest rates finally take their toll on US economic growth. Technology stocks were the second biggest sectoral losers after energy shares as a disappointing sales outlook by industry bellwether Intel and a rating downgrade on International Business Machines hurt sentiment.

Nokia, the world's largest mobile phone maker, retrenched from Thursday's 20-month highs, shedding 1.6 per cent, while Dutch electronic chip equipment maker ASML, which counts Intel as a client, lost nearly 1.5 per cent.

Other blue chip decliners included Schering, off 2.9 per cent after the US Food and Drug Administration extended its review of the German drug-maker's new drug application for oral contraceptive YAZ to the first quarter of next year.

Also weighing on the German drug-maker was news that it was weighing an option to buy exclusive marketing rights to multiple sclerosis drug Betaseron developed by drug-maker Chiron - a move which a press report said might cost it up to €1 billion.

On the upside, mining stocks soared as gold prices topped $520 an ounce for the first time since April 1981, while shares in Dutch publisher VNU jumped nearly five per cent after the Wall Street Journal reported that two consortiums of private equity firms were considering bids for the company.