[MILAN] European shares fell on Thursday as weak US data fed concerns that the world's biggest economy may be slowing down, with export-oriented auto stocks leading the decline and Credit Suisse tumbling after reporting a full-year loss.
Losses, however, were limited by a rally in commodities which lifted miners and oil sector stocks.
US non-farm productivity slumped in the fourth quarter and jobless claims rose more than expected, data showed. That put added pressure on the dollar, which has been weakening as expectations for more US interest rate hikes this year fade.
"The dollar is weakening because the market is starting to worry that the strength of the internal labour market may not be enough to contain the headwinds," said Marco Vailati, head of research at Cassa Lombarda. "What's needed are strong data that pour cold water on mounting expectations for a slowdown".
The pan-European FTSEurofirst 300 index ended down 0.15 per cent after a choppy day, while the STOXX 600 index fell by 0.2 per cent to 328.8 points. Swiss bank UBS cut its year-end target for the STOXX 600 by 8 per cent to 400 points.
Credit Suisse slumped 10.9 per cent, the biggest loss in the FTSEurofirst 300 index. The bank posted its first full-year loss since 2008 after it booked a big impairment charge for its investment banking business under new Chief Executive Tidjane Thiam.
Export-oriented auto stocks fell 2.7 per cent, making them the second biggest sectoral faller. Daimler fell 3.2 per cent after the German car maker predicted only modest growth this year after big increases in 2015, held back by higher investment and slower sales growth for its Mercedes-Benz cars in China.
On the other hand, miners and oil and gas stocks surged 7.3 per cent and 3.3 per cent respectively, as the decline in the US dollar made dollar-priced crude oil and metals cheaper for those using other currencies. The mining index staged its best one-day gain since September 2011.
Royal Dutch Shell, Europe's largest oil company, rose 6 per cent, in line with other commodities stocks, despite reporting its lowest annual income in at least 13 years.
ING jumped 8.9 per cent, the biggest gainer in the pan-European FTSEurofirst 300 index. The Netherlands' largest bank reported better-than-expected fourth-quarter earnings and played down its oil exposure.
AstraZeneca slumped 6 per cent after warning that revenue and earnings would drop this year due to the arrival of cheap generic rivals to its top-selling cholesterol drug.
Of the companies on the STOXX 600 that have reported fourth-quarter earnings so far, 52 per cent have met or exceeded expectations and 48 per cent have fallen short, according to Thomson Reuters StarMine data.