Euro Stocks End Mostly Lower, US Data Supports

European equities bounced from the day's lows to end with small losses on Thursday, as gains in U.S. markets and rising oil shares offset the impact of weakness in banks -- last year's worst performers.

Retailers were worst hit, with the DJ STOXX retail index down 2.5 percent on a profit warning from British retailer DSG International and a gloomy outlook from clothing group Next. DSGI tumbled 27 percent and Next lost 6.8 percent.

The pan-European FTSEurofirst 300 index ended 0.2 percent weaker at a provisional 1,484.9, well above session lows of 1,472.9. It lost 1.3 percent on Wednesday, after closing 2007 with a 1.6 percent gain, its worst performance since 2002.

"Despite the various pressures facing today's market, persistent tame inflation remains the key factor underpinning positive equity-class returns," Jeff Applegate, chief investment officer at Citi Global Wealth Management said in a note.

"That's why we think prospects bode well for a long business and profit cycle -- and why global equities should see another year of positive returns in 2008."