Eurostocks end softer after US data, banks slide

European stocks finished lower yesterday after a busy earnings week, weighed down by Wall Street weakness and falls in British bank Lloyds TSB and Deutsche Bank after disappointing results.

US data releases did little to clear the muddied outlook for investors seeking confirmation of a recovery in the world's largest economy.

Weaker-than-expected employment and manufacturing data yesterday contrasted with upbeat GDP data on Thursday and a survey showing a slight rise in US consumer confidence.

"It's not surprising that initial reaction to this data was negative because you are not getting a strong confirmation of growth prospects," said Andy Hartwill, global strategist at SG Securities.

Pan-European indices, which surged between March and June, remained trapped in tight ranges, constrained by limited revenue growth at corporations and a patchy economic outlook.

The FTSE Eurotop 300 index of European blue chips closed down 1.4 per cent at 871 yesterday, trimming its gains for the week to around one per cent.

Declining issues outnumbered gainers by more than two-to-one yesterday.

The narrower DJ Euro Stoxx 50 index ended down 1.7 per cent at 2,477 on the day and with a gain of one per cent for the week.

Across Europe, London's FTSE closed down 1.4 per cent on Friday, while Paris was off 1.3 per cent and the Swiss index dipped 0.7 per cent.

Germany's DAX, the only market still officially trading at 1535 GMT, was down 1.9 per cent, having hit its highest level in almost a year on Thursday.

In New York, the Dow Jones industrial average was off 0.8 per cent at 9,157, while the techology-heavy Nasdaq Composite Index was down one per cent at 1,718 as investors studied the latest economic data.

The Institute of Supply Management's key gauge of manufacturing activity edged higher in July but less than economists had hoped.

Earlier, US non-farm payrolls unexpectedly decreased by 44,000 in July although the jobless rate fell to 6.2 per cent.

Growing hopes of a global recovery had fuelled a rally in the dollar this week, pushing the euro down three per cent before a modest rebound in the European currency yesterday.

The strength of the euro during the first half of the year was blamed for crimping earnings at a number of European companies, among them French hotel group Accor and German drugmaker Schering.

"I continue to say that the euro zone in general needs currency strength like it needs a hole in the head," SG Securities' Hartwill said.

"Fundamentals suggest we should see further dollar recovery against the euro and that will provide some relief to euro-zone companies."

Heavily weighted financial stocks turned in a mixed report card with their latest results and attention will again turn to the sector when bellwethers HSBC and Credit Suisse report next week.

Anglo-American fund giant Amvescap gained 3.2 per cent yesterday after cost-cutting helped it beat market forecasts, although profits were down on a year earlier.

But Lloyds TSB ended down 5.0 per cent after a cautious assessment of its first-half profit and Deutsche Bank shed a further 5.87 per cent after Thursday's below-consensus results.

Investors rewarded the few companies that beat market revenue and sales expectations, such as Belgian supermarket chain Delhaize, which jumped 23 per cent yesterday after raising its 2003 sales and earnings targets.

Swiss engineer ABB put in a stellar performance after it reported a narrower-than-expected loss on Tuesday and said it would return to profit this year.

The stock rallied 53 per cent during the week.