Commodities, banks drag European shares lower

European shares fell by Wednesday midday, snapping a six-day winning streak in very thin trading, with commodity stocks tracking lower crude oil and metals prices and banking stocks reversing earlier gains.

By 1124 GMT, the pan-European FTSEurofirst 300 index was down 0.7 percent at 1,039.81 points, with volumes on the index about 15 percent of the 90-day daily average.

The index is up 61 percent since reaching a lifetime low in early March and is on track to record a gain of 25 percent this year, its best annual performance since 1999.

"Everything is winding down and ending down. But, we should not read too much into what is happening at the moment … positions are being squared," said Justin Urquhart Stewart, director at Seven Investment Management.

"I think there is a dose of realism in the market. We have staged an astonishing recovery … but we now need to see some proof to actually justify it," he said.

Banks reversed earlier gains and took the most points off the index. Standard Chartered fell 1.5 percent reflecting weakness by banks in Hong Kong on concerns over further Chinese government measures to temper asset bubbles.

Banco Santander, UBS and Deutsche Bank were 0.8 to 2.3 percent lower.

Miners slipped as gold prices retreated on the back of a firmer dollar. Anglo American, Antofagasta, BHP Billiton, Rio Tinto and Xstrata fell 0.8 to 1.7 percent.

Energy stocks were lower as crude slipped 0.2 percent. BG Group, Dana Petroleum, Royal Dutch Shell and Total were down 0.8 to 1.7 percent.

Later in the session, investors will eye the U.S. Chicago PMI for December at 1445 GMT. Economists in a Reuters survey forecast a December reading of 55.0 compared with 56.1 in November.

"There is just no volume. The business for the year has been done and unless we have any unexpected announcements the market will not move much in either direction until the New Year," said Howard Wheeldon, strategist at BGC Partners.

Across Europe, the FTSE 100 index was down 0.5 percent, Germany's DAX was 0.8 percent lower and France's CAC 40 fell 0.7 percent.