Another depressed morning on Wall Street put a check on activity in the European bourses as the day's benign US inflation data failed to calm worries about the prospect of higher interest rates.
Frankfurt gave up early gains in spite of take-over speculation that sent luxury carmaker BMW speeding ahead. The Xetra DAX index turned back from a high of 7,658.88 to close 6.75 easier at 7,573.78.
A barrage of take-over rumours sent BMW up to a morning high of €28.50 before profit-taking pulled the share back to close 1 or 4 per cent higher at €26.20. Elsewhere, Commerzbank eased 20 cents to €39.55 and Deutsche Telecom put on two to 89 in response to the Internet deal, announced on Thursday.
Shares in Software soared on news it planned to float part of its SAP-Si joint venture with Europe's biggest business software maker, SAP. Software shares closed €15 or 17.7 per cent higher at €100 after peaking at €106.49, while SAP's heavily traded preference shares were €8.05 weaker at €870.95.
Paris lost 1.5 per cent, pulled down by heavyweight stocks Alcatel and Carrefour. The CAC-40 index shed 92.24 to 6,062.72, making a loss for the week of 3.6 per cent.
Alcatel fell 7.4 per cent or €19.20 to €239.80 amid speculation it could bid for Canada's Newbridge Networks with a capital increase that would dilute earnings per share.
Carrefour was hit by a newspaper report on new competition rules which could restrict food retailers' business. Its share price fell by 8 per cent or €11.30 to €129.1. Promodes fell €84 to €775 and Casino €2.85 to €91.
There were strong movements both up and down within the CAC 40. Among the losers, LVMH was down €18.80 to €376.20, Saint Gobain €7.50 to €135.50 and Air Liquide €10.40 to €140.60. The big gainers included Alstom, up €1.80 to €27.40, and Credit Lyonnais up €2.53 to €39.30.
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