Euro Shares Fall for 4th Session, Outlook Bleak

European shares fell for a fourth consecutive session on Thursday, weighed down by investors' jitters over a gloomy earnings picture by cellphone maker Nokia and software giant Microsoft.

The FTSEurofirst 300 index of top European shares closed 0.8 percent lower at 762.79 points, after rising as high as 786.35.

The index has fallen 8 percent so far this year, on the top of a 45 percent plunge in 2008.

Nokia fell 9 percent after a worse-than-expected dive in its fourth-quarter profit and its warning that market volumes would shrink 10 percent this year as the economic slowdown hits consumer spending.

Microsoft, the world's top software maker, shocked investors with disappointing results, plans to cut up to 5,000 jobs and stop offering profit forecasts for the rest of the year.

"On the one hand, you have very strong stimulus packages from governments and on the other hand, you have an extremely weak economy and a horrible fourth quarter," said Philippe Gijsels, senior strategist at Fortis Bank.

"These two are doing a battle at the moment, but I still think that we have a second chance of a bear market rally by the end of February or early March and then we get back down again because it's still a bear market," he added.

British telecoms provider BT Group fell 9.1 percent after it said it would take charges of 340 million pounds at its Global Services unit for the quarter to end-December that would outweigh better-than-expected results at the rest of the group.

In another sign of pain in the tech sector, Intel said it was closing plants with the loss of as many as 6,000 jobs. Its shares fell 5.1 percent.

Other technology shares were also lower, with Alcatel-Lucent , ASML Holding and STMicroelectronics slipping between 3 percent and 4.2 percent.

Gloomy Data Hits Sentiment

Gloomy data further dampened sentiment. The number of U.S. workers lining up for jobless benefits surged last week, while new housing starts and permits hit record lows in December, pointing to an acceleration in the economy's downward spiral.

European countries are also hit hard, with European Central Bank Governing Council member Christian Noyer saying the region's economy may shrink 2 percent this year.

The global economy has deteriorated relentlessly since the credit crunch took a turn for the worse in September with the collapse of investment bank Lehman Brothers.

Fresh worries that the poor health of banks and economies will require yet greater government intervention have sparked a new wave of risk aversion among investors, pushing investors into safe havens such as U.S. Treasuries.

In Washington, President Barack Obama's pick for Treasury Secretary, Timothy Geithner, told senators a detailed plan to rescue the U.S. financial system will be presented in the next few weeks.

"With no economic data due from the U.S. in the week's final session, the debate about the Obama effect may yet have a little longer to be played out in traders minds," said David Fineberg, chief dealer at CMC Markets.

"But certainly that leap in weekly jobless claims underlines yet again just how perilous the whole economic landscape still is," he added.

Banks advanced on Thursday after recent heavy losses.

KBC surged 50 percent after the Belgian banking and insurance group secured a 2 billion euro ($2.58 billion) cash injection  from the Flemish government.

The stock had lost some 63 percent in the previous four sessions.

Commerzbank added 1.9 percent, Lloyds Banking Group jumped 8.9 percent and UBS rose 5.3 percent. Barclays fell 10.4 percent.

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