European shares slip ahead of ECB decision

European shares slipped on Thursday, after making their biggest daily surge since late May in the previous session, on caution ahead of the European Central Bank interest rate decision and U.S. pending home sales. However, losses were limited, with gains in carmakers helping to offset falls in the banking sector ahead of the ECB decision.
By 0854 GMT, the pan-European FTSEurofirst 300 index of top shares was 0.2% lower at 1,053.2 points, after surging 2.9% to 1,055.69 points on Wednesday following upbeat manufacturing data from China and the United States.
The STOXX Europe 600 Automobiles & Parts rose 0.7%, with Daimler up 0.9%. The German carmaker said late on Wednesday that U.S. sales of Mercedes Benz and Smart brand vehicles rose 7.4% in August. Separately, UBS upgraded the stock to "neutral" from "sell".
The ECB is seen keeping rates at a record low of 1% at 1145 GMT. The main interest will be the news conference at 1230 GMT, with the ECB expected to extend its liquidity safety-net as it confronts a lopsided euro zone recovery and vulnerable banks in perimeter countries.
Banks featured among the worst performers ahead of the ECB decision. Spanish banks Banco Santander and BBVA slipped 1.3% and 1.1%, respectively, while Ireland's Allied Irish Bank fell 1.9%.
Elsewhere, French spirits giant Pernod Ricard slipped 2.5%. The company said it would focus on cutting debt and on boosting marketing spend this year to bolster consumption as the drinks market gradually recovers.
Autonomy gained 4.4 percent, after traders cited press reports the software company could find itself at the centre of a takeover battle between Microsoft and Oracle.
Meanwhile, the Euro STOXX 50 was 0.2% lower at 2,710.37, holding above a key support level, the 38.2% retracement of a fall from an April high to a May low after breaking through the 23.6% retracement level on Wednesday.
Valuations on the Euro STOXX 50E looked cheap. Its one-year forward price-to-earnings stood at about 8.9 against a 10-year average of 14.1, Thomson Reuters Datastream showed.
Across Europe, the FTSE 100 index was down 0.03%, Germany's DAX was 0.2% lower and France's CAC 40 was down 0.3%.