European shares were lower at midday on Monday, as energy stocks suffered from lower crude prices, with miner Anglo American among the few heavyweight risers after a merger approach from Xstrata.
At 1057 GMT, the pan-European FTSEurofirst 300 index of top shares was down 1.4 percent at 849.72 points, after gaining 1.3 percent on Friday.
The European benchmark index is up more than 31 percent from lifetime low it hit on March 9, as investors have become more confident in the prospects for economic recovery.
However, some analysts feel the rally has gone too far, relative to the tangible evidence of recovery.
The World Bank warned on Monday prospects for the global economy remained "unusually uncertain" despite recent signs of improvement in parts of the world, and it cut its 2009 growth forecasts for most economies.
"The depth of the recession is still apparent," said Darren Winder, head of macro and strategy research at Cazenove in London. "This is a large decline in output, driven largely by sharp declines in capital spending and aggressive reductions in inventories."
He added: "The effects of reductions in interest rates are still coming through."
Energy stocks were lower as crude fell more than 2 percent to $68.60 a barrel, partly due to the dollar bouncing following recent losses.
Total, ENI, BP, Royal Dutch Shell, Repsol and StatoilHydro were down between 1.8 and 3 percent.
But lower oil failed to help airlines.
British Airways was down 6.5 percent, on course for its lowest close in more than three months. Weekend press speculation suggested it needed state aid, though the company denied this. Last month, it reported a record annual loss and cancelled its dividend, and has a substantial pension deficit.
Deutsche Lufthansa was down 2.4 percent. After the market closed on Friday, the airline warned that it would not be able to post an operating profit as planned this year without further cost cuts given difficult markets.
ANGLO AMERICAN JUMPS
Anglo American gained 5.4 percent after Xstrata said on Sunday it wanted talks with the group about a proposed merger of equals worth about $68 billion, seeking increased scale and cost synergies.
Xstrata was down 4.3 percent, and other miners were hit by falling metal prices with copper down 1.7 percent. Antofagasta, BHP Billiton, and Rio Tinto were 1.5-2.9 percent lower.
Vedanta Resources shed 4.2 percent despite being one of the companies promoted to the FTSEurofirst 300 in the quarterly reshuffle, effective Monday.
Most of the heavyweight banking sector was lower. Banco Santander, BNP Paribas, Deutsche Bank, Societe Generale and UniCredit were down between 1.9 and 3.7 percent.
French retailer Carrefour gained 2.8 percent after Merrill Lynch upgraded its rating on the stock to "neutral" and raised its price target to 32 euros from 26.5 euros.
Across Europe, the FTSE 100 and France's CAC 40 were down 1.3 and 1.6 percent respectively.
Germany's Ifo index rose for the third month running in June to reach its highest level in seven months. But it failed to boost the DAX, down 1.4 percent.
Futures for the Dow Jones, S&P 500 and Nasdaq were between 0.6 and 0.7 percent lower.
