European stocks fell slightly on Wednesday, hit by lower-than expected U.S. consumer sentiment after earlier marking their strongest levels in 5-1/2 years on the back of merger talk in several sectors, according to Reuters. Trading volumes were thin ahead of Thursday's Thanksgiving holiday in the United States. The pan-European FTSEurofirst 300 index fell 0.16 percent to 1,466.01 after earlier rising to 1,476.5, its strongest intra-day high since May 2001. Around Europe, London's FTSE 100 shed 0.68 percent, Paris's CAC-40 fell 0.13 percent, while Frankfurt's DAX rose 0.24 percent. Across the Atlantic, the Dow Jones Industrial average was almost flat by 1645 GMT. Markets turned red after the University of Michigan's final reading of its November index of consumer sentiment fell to 92.1 percent from October's 93.6, according to market participants. Postbank strategist Heinz-Gerd Sonnenschein said some investors were worried that economic growth was less robust than expected before the start of the key holiday shopping season. Joerg Treptow, a trader at MM Warburg, said: "Some investors preferred to book profits after the weak data. But the upside trend prevails." Among top losers was Credit Agricole, which fell 4 percent after France's biggest retail bank posted weak third-quarter revenue. "The expectations were better than the reality," said GSD Gestion fund manager Christophe Gautier. On the upside was British chemicals firm ICI, which jumped 9.3 percent after it sold Quest International to Swiss flavours maker Givaudan at a price investors saw as higher than expected. Miner BHP Billiton gained 0.4 percent on talk it might be bidding for Freeport-McMoran, which agreed to buy Phelps Dodge this week. The index of Europe's top 300 companies is up nearly 16 percent so far this year on a surge in takeovers, robust earnings and strong economic growth. "To us it seems that now there is every reason to feel positive about Europe," said Nigel Hankin and Ben Williams, managers of Investec Asset Management's pan-European fund. But Postbank's Sonnenschein cautioned: "We're in the middle in a phase of reorientation after strong recent gains. We'll continue to see markets nervously switching from red to black." EXCHANGES AGAIN IN FOCUS British Airways rose 2.1 percent on positive sector sentiment after investment bank Macquarie Bank and private equity firm Texas Pacific Group proposed to buy Australian airline Qantas. Among other gainers, Euronext's shares rose 5.3 percent following the NYSE's 10 percent rally overnight, as investors interpreted a change in the terms of the exchange's planned merger as the removal of one of the last obstacles in the way to completing the transatlantic tie-up. Also in the industry, Deutsche Boerse rose 6.5 percent on short-covering by investors who had bet on a steep plunge after the German exchange operator broke off merger talks with Euronext as well as general sector euphoria. In the wind power industry, Denmark's Vestas Wind Systems and German rival Nordex rallied after the Danish firm gave an upbeat outlook for the next two years. But international energy business Scottish Power fell 2 percent amid market fears the potential bid from Spanish utility Iberdrola will fail because the price is too high. Crude oil futures fell 2.5 percent to $58.65 a barrel by 1650 GMT.
