European shares fell on Friday after poor data cast doubt on the quality of US economic recovery, stalling the market's climb to a 16-month peak earlier in the first full week of trading this year.
Royal Dutch/Shell led the downdraft, skidding 7.6 percent to 38.3 euros in Amsterdam after the world's second-largest oil group said it would recategorize 20 percent of its proven oil and gas reserves.
Shell said the move would have no effect on its results, but analysts said valuations and ratings on the stock would fall.
French hypermarket group Carrefour also fell sharply, down 5.6 percent to 41.6 euros, after the firm posted disappointing fourth-quarter sales.
But rival Ahold, recovering from an accounting scandal, rose 8.8 percent to 6.1 euros as the Dutch group reported a fall in last year's sales that was largely due to the weaker dollar rather than operating reasons, and in line with market expectations.
Cash-starved French heavy engineer Alstom also rose 8.2 percent to 1.5 euros on news it had completed a 930-million euro sale of a key unit to raise money.
The FTSE Eurotop 300 index, which closed at its best level since August 2002 on Thursday, retreated 0.5 percent to end at 971.4 points, moving off its lows as Wall Street began to recover from the jobs data shock.
Roughly three shares fell for every two that rose. Volume was good. For the week, the index was up 0.25 percent, though still near its 16-month high of 982.05 points of Thursday.
The DJ Euro Stoxx 50 index dropped 0.7 percent to close at 2,800.16 points.
By the time bourses shut, New York had begun paring its losses, with the Dow Jones Industrial Average off 0.5 percent at 10,543 points.
The NASDAQ Composite was up 0.17 percent at 2,103 points. Both benchmarks had closed at multi-year highs in the prior session.
The number of workers on US payrolls outside the farm sector in December rose by just 1,000. Economists had forecast that non-farm payrolls grew by 130,000.
The unemployment rate fell to 5.7 percent, against expectations it would remain at 5.9 percent.
"On balance, the flavor in this report leaves a bad taste in the mouth, given the raw strength in virtually all the economic data," said BNP Paribas Bank's economics team.
"Rising domestic demand is being met with increasing productivity and firms continue to have a cost-cutting mentality," BNP said.
Investors want reassurance the US recovery is creating jobs to ensure that consumers keep spending.
On a brighter note, economists said the data would help keep the Federal Reserve from raising interest rates anytime soon.
The figures also sent the dollar to a record low against the euro to put pressure on the competitiveness of exporting sectors in Europe such as autos, basic producers and healthcare.
Good old days?
The year's first full week of trading saw investors switching deeper into technology -- last year's best-performing industry group -- and also into telecoms and media.
The three sectors were the week's best performers, rekindling memories of the late 1990s, when TMT was shorthand in Europe for the bull run before the groups fell spectacularly.
So far in 2004, tech is up 13 percent, while media is 5 percent ahead, and telecoms 6.2 percent.
"I don't think this is fleeting sector rotation as the growth we are seeing in the economy is much focused on corporate spending that benefits the technology sector," said Gary Dugan, European strategist at JP Morgan Fleming Asset Management.