Frankfurt Dax: German shares closed little changed, retreating slightly after giving earlier momentum when they hit a record high. Waning optimism about Japan's plans to restructure its banking system weighed on the market.

Hoechst was up after a Goldman Sachs upgrade, but RWE fell after being downgraded by BWF Bank, even though the utility reported record earnings for the 10th year in a row although sales were flat.

Corporate news was thin, but Allianz said it intended introducing a range of capital measures to facilitate its policy of cross-shareholdings. It said it would seek approval for a plan to raise up to 100 million deutschmarks through a capital raise against assets.

Paris CAC-40: French stocks closed lower despite the morning's record high as the Japanese banking plans failed to reassure investors. Market-friendly US payroll figures did perk up the market and made for a late rally, but analysts said the market would at best consolidate as investors reflected on the Japanese news.

One dealer said the market was too near a CAC resistance level of 4500 predicted for the year-end to maintain its record highs and predicted calmer trade in the near future.

Stocks with a significant exposure to Asia lost most of their early gains and LVMH which at one stage was up 1.3 per cent closed up just 0.3 per cent on the day. Bank shares also lost earlier gains with BNP, Paribas, and Societe Generale all weaker in the afternoon session.

Milan Mibtel: The Milan market ended up, but off the session highs as Wall Street opened lower and European markets eased back after the Japanese banking plans disappointed the markets.

Banks put in a strong performance after lagging the market in recent sessions, with San Paolo up5.6 per cent, while IMI closed 4.15 per cent higher.

Recent underperforming stocks were also firmer, with Olivetti up almost 4 per cent. ENI, however, fell on profit-taking after its rally on Wednesday, but Italcementi was higher on vague talk of a merger.