European shares dipped in choppy early trade on Thursday as oil stayed near the $40-a-barrel mark, hurting energy shares and pushing investors to seek the relative safety of drugmakers.
By 0942 GMT, the pan-European FTSEurofirst 300 index of top European shares was down 0.1 percent at 827.50 points after being down as much as 825.51 points and up as much as 833.02. The index has been down around 45 percent for the year.
Energy stocks led the losers. BP, StatoilHydro, BG Group, and Royal Dutch Shell fell 1.1-1.8 percent.
Underlining investor worry about the economy, Germany's Ifo business climate index deteriorated sharply in December, falling to 82.6 from 84.0 in November, with manufacturers of export goods suffering acutely from the global downturn.
"As we have a recession to get through, the news flow is going to be negative and it is likely that we see more low readings of the Ifo index survey. But the market is adjusting to bad news and it is now priced into the market," said Mike Lenhoff, strategist at Brewin Dolphin.
"There seems to be a much better tone to the markets. I think the trend is going to be up for a while as policy makers pull out all the stops so the recession does not fall into anything worse," he added.
Heino Ruland, strategist at FrankurtFinanz, said: "The Ifo survey did not do anything to the market. Markets do not react to bad news anymore as they already faced so much, they have become resilient."
In the UK, British retail sales rose unexpectedly in November while public sector net borrowing rose to its highest monthly total since records began, the Office for National Statistics said.
British Airways fell 3.8 percent after merger talks were called off with Australia's Qantas Airways.
Across Europe, the FTSE 100 index was up 0.6 percent, Germany's DAX was up 1.2 percent and France's CAC 40 was 0.2 percent lower.
CARREFOUR TAKES A HIT
French retail giant Carrefour lost 8.2 percent after it warned it expected sales growth of 6.5 percent in 2008 at constant exchange rates, down from a previous target of around 7 percent.
Miners were also in the doldrums as copper retreated 2.3 percent.
BHP Billiton lost 2.2 percent after it announced it is largely maintaining sales volumes despite the global economic downturn, but it stands ready to cut production if necessary.
Anglo American, Antofagasta, Kazakhmys , Rio Tinto, and Vedanta Resources were down 1-3.6 percent.
Drug makers were the top risers on the index as investors turned to the relative safety of defensive stocks.
GlaxoSmithKline, AstraZeneca and Sanofi-Aventis were up 0.9-3.5 percent.
The DJ Stoxx European healthcare index has been the best performer this year, falling 20 percent compared to a decline of more than 60 percent for banks and miners as a credit crisis shook investor confidence.
Banks were broadly lower.
BNP Paribas slipped 6.7 percent after it said it could not proceed with Fortis stake acquisition as planned because of Brussels court decision. Fortis gained 9.3 percent.
HSBC fell 3.3 percent as investors worried about likely dividend cuts and capital raising at Europe's largest bank.
