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European shares lose ground amid interest rate fears

European shares lost ground on Friday as investors continued to worry about the impact of higher interest rates, while shares in French bank BNP Paribas rose after a report stirred up takeover hopes for the group.

The UK FTSE 100 index closed virtually unchanged at 6,505.10, the German DAX Xetra 30 index fell 0.4 percent to 7,590.50 and the French CAC-40 index slipped 0.1 percent to 5,883.29.

Equity markets have come under pressure as perceptions of interest rate levels have changed after indications of stronger-than-expected economic growth, particularly in the US. Most investors no longer expect the US Federal Reserve to cut interest rates this year and both the European Central Bank and the Bank of England are expected to raise rates later in the year.

Gains of more than 1.1 percent from chipmakers Infineon Technologies and STMicroelectronics and a positive open on Wall Street weren't enough to lift European markets to a higher close.

Mining companies were mostly lower. Kazakhmys fell 1.4 percent, Vedanta Resources lost 2.5 percent and BHP Billiton dropped 1.4 percent.

French bank BNP Paribas managed to gain 1.5 percent in Paris after a report that Societe Generale has commissioned two banks, one of which is Morgan Stanley, to study two cases of a possible tie-up with peer BNP Paribas, French daily Les Echos reported, without citing sources.

UK retail bank Lloyds TSB Group said that it has continued to make strong progress in the first half of the year. Shares slipped 0.3 percent, just underperforming the broader London market.

Elsewhere in Europe, in Milan the SP/MIB fell 0.51 percent to 41,712 points, in Amsterdam the AEX lost 0.07 percent to 534.69 points and in Brussels the BEL 20 lost 0.08 percent to 4,507.90 points.

The Swiss SMI index fell 0.02 percent to 9,150.62 points, while the EuroSTOXX 50 index fell 0.11 percent to 4,376.42 points.
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