European shares drop, London down 0.8%

LONDON: Europe's main stock markets dropped on Thursday as banking shares reversed recent gains, while investors reacted to a weak performance by Tokyo and a mixed overnight showing on Wall Street.

London's benchmark FTSE 100 index fell 0.80 percent to 5,277.93 points in late morning trade, as dealers here also digested a surprise drop in British retail sales.

Frankfurt's DAX 30 slid by 0.64 percent to stand at 5,865.27 points and the Paris CAC 40 slipped 0.63 percent to 3,851.29 nearing the half-way mark of Thursday's trading session.

The DJ Euro Stoxx 50 index of top eurozone shares decreased by 0.73 percent to 2,905.03 points.

Banking shares, which had risen sharply on Wednesday, headed south on profit-taking. Deutsche Bank dropped 1.02 percent to 51.67 euros, Societe Generale shed 1.76 percent to 48.29 euros and in London, state-controlled Lloyds Banking Group dived 3.89 percent to 53.44 pence.

Investors meanwhile digested official data showing retail sales in recession-hit Britain had fallen unexpectedly in November for the first time in six months, dropping by 0.3 percent compared with October.

Analysts' consensus forecast had been for a month-on-month climb of 0.6 percent in retail sales during the traditional busy pre-Christmas shopping season, according to Dow Jones Newswires.

Sales meanwhile jumped by 3.1 percent last month compared with November 2008, the Office for National Statistics (ONS) said in a statement. However analysts had forecast a bigger rise of 3.7 percent.

Elsewhere, the share price of British Airways retreated by 1.0 percent to 195 pence.

Holiday plans of up to one million people hung in the balance Thursday as a London court was set to rule on an injunction to block a planned 12-day strike by British Airways cabin crew.

The High Court is expected to rule on the legality of the mass walkout planned by 12,500 staff between December 22 and January 2, amid a deepening row over working conditions.

Earlier on Thursday, the Tokyo Stock Exchange's benchmark Nikkei-225 index declined 0.13 percent to close at 10,163.80 points.

US stocks ended mixed on Wednesday as traders mulled a Federal Reserve statement offering a more upbeat assessment of the economy that led to speculation about a faster path to higher interest rates.

The Dow Jones Industrial Average dipped 0.10 percent to close at 10,441.12 points, handing back gains from earlier in the day.

The Nasdaq composite managed to hold a gain of 0.27 percent and the broad-market Standard & Poor's 500 index edged up 0.11 percent.