Eurostoxx:2,462.36 (-14.56) Frankfurt DAX:6,346.19 (+8.35) Paris CAC:3,348.63 (-19.99)

EUROPEAN SHARES slipped yesterday after the previous session’s rally on the European Union’s debt deal, as a disappointing Italian bond auction fuelled investors’ scepticism about the plan to tackle the region’s debt crisis.

The FTSEurofirst 300 index made its fifth week of gains, boosted by Thursday’s sharp moves after policymakers struck a deal that included leveraging up a rescue fund to €1 trillion and a 50 per cent writedown for private bondholders of Greek debt.

But some investors are concerned by the lack of detail in the outline plan.

At a sale of 10-year Italian bonds yesterday, yields hit a euro-era high, underlining the country’s vulnerability at the heart of the debt crisis and causing the Italian FTSE MIB to drop 1.8 per cent, underperforming other exchanges.

“Yesterday was encouraging, although we do not know much details on the deal,” Veronika Pechlaner, a fund manager on the Ashburton European equity fund, said.

“We were fully invested going into the meeting. But the Italian bond auction spooked the market. It tells us we can not relax yet and Italy has to make more progress on the restructuring side.”

Octopus Investments remained cautiously positioned. “Following the progress that risk assets have made, we are braced to see more downside from here as investors begin to look for more detail on how the EFSF will be leveraged to the €1 trillion mark,” said Lothar Mentel, chief investment officer at Octopus Investments which manages $4 billion.

The FTSEurofirst 300 index .FTEU3 closed down 0.2 per cent at 1,018.14 points and ended the week up 4.1 per cent – its biggest weekly gain since early October.

The benchmark index is still down 9.2 per cent so far this year as concerns have grown about the macro economic environment and contagion from the euro zone debt crisis.

Strong third-quarter sales at Renault lifted the shares up 4.5 per cent to become the top performer on the French CAC.

Wacker Chemie dropped 9.8 per cent to become the biggest faller on the FTSEurofirst 300 index after the world’s No 2 maker of polysilicon cut its outlook. – (Reuters)