Europe shares fall in early trade; banks lead

European shares fell back from a one-month closing high in early trade on Thursday, after the U.S. Federal Reserve reiterated that its special liquidity measures would expire early next year.

At 0808 GMT, the FTSEurofirst 300 index of top European shares was down 0.5 percent at 1,026.01 points, having hit a one-month closing high on Wednesday.

The European benchmark is still up more than 58 percent from its lifetime low of March 9, with several major economies having emerged from recession.

The heavyweight banking sector took most points off the index. BNP Paribas, Banco Santander, Barclays and HSBC fell between 1.2 and 2.4 percent.

U.S. markets gave up earlier gains and closed little changed on Wednesday after the Fed voiced growing optimism on the economy as job losses slow, but repeated a vow to keep interest rates unusually low for "an extended period."

Underscoring improving conditions for banks, the Fed said it would stand by plans to shutter most of its emergency lending facilities on Feb. 1, showing growing confidence that credit markets could stand on their own.

Later, investors' attention to weekly jobless clamns data in the United States, due at 1330 GMT, and the leading indicators index, at 1500 GMT.

"Markets are still trying to find a trend and establish whether the improvement in the economy is due to stimulus packages," said Justin Urquhart Stewart, investment director at Seven Investment Management.