European shares slipped by midday on Wednesday after a mixed set of corporate earnings and comments by a top Federal Reserve official about inflation, which rekindled concern about further U.S. monetary tightening, REUTERS REPORTED. Disappointing results in the technology and the mining sectors and a dip in EADS after a new report of delays in its A400M military transport plane programme offset the positive impact of a bullish update from Nestle. A retreat in oil prices to below $73 a barrel helped limit the market's fall, with the pan-European FTSEurofirst index of 300 leading shares down 0.2 percent at 1,357.72 points by 1050 GMT -- up 6.5 percent since the start of the year but still 3.5 percent below a five-year peak in May. Trading volumes were thin as many investors were still on holiday. Chicago Federal Reserve Bank President Michael Moskow said inflation remained a bigger threat to the U.S. economy than slowing growth and that the Fed might need to raise interest rates again. His comment worried investors who had interpreted recent data to mean the Fed would keep rates on hold for now. Investors turned their attention to Friday, when Fed President Ben Bernanke is due to speak at a Federal Reserve Bank of Kansas City Economic Forum. Rate fears coupled with lingering world political worries and doubts over the earnings outlook may cap equity buying in coming weeks, but the outlook for European equity remains supportive, said strategist Rolf Elgeti at ABN AMRO in London. "We remain positive on equities in the medium to longer term. We believe the inflation risk is in the price of equities by now, and we think the earnings story is not quite as bad as many people believe," Elgeti said, forecasting new market gains in the final quarter of the year. Around Europe, London's FTSE 100 index, Paris's CAC 40 and Frankfurt's DAX each shed 0.2 percent. The Swiss Market Index was flat in Zurich.
