Volkswacht Bodensee - European stocks dip from records, shrugging off gains elsewhere

London, Paris and Frankfurt indices fell in unison, one day after expectations for cuts by the Bank of England and European Central Bank helped all three score their own records.

"Profit-taking is likely to be the main driver behind today's weakness in stocks," City Index analyst Fawad Razaqzada told AFP.

"Given that we have not had any major catalysts to drive markets lower, I would not be surprised if the small dip is bought yet again" by traders, which would send European markets back into positive territory.

Asian equities rallied Thursday after US data showed inflation cooled last month, fuelling speculation that the Federal Reserve will cut interest rates twice this year and sending Wall Street to record heights on Wednesday.

But London stocks slid as energy majors BP and Shell took a knock from oil prices which sank on demand concerns, while software firm Sage Group was the heaviest faller on poorly-received earnings.

"European markets have failed to follow the bullish theme set in the United States," noted Scope Markets analyst Joshua Mahony.

"The FTSE 100 in particular has been hindered by the heavy weighting of energy stocks" as a large component of the index.

US inflation came in at 3.4 percent in April on an annual basis, down from 3.5 percent in March, data showed Wednesday.

The April reading was in line with forecasts and capped a run of three straight months above estimates that had forced investors to reel in their rate cut hopes.

Sentiment was given an extra boost by figures showing retail sales well below expectations, suggesting consumers were taking a step back.

Yet traders remain anxious because US inflation remains well above the Fed's two-percent target.

"While US markets may have pushed into record highs, yesterday's inflation data did little to encourage the view that above-target inflation is going away," warned Mahony.

The Fed is now tipped to reduce borrowing costs twice before the end of the year, an increase on the one previously predicted -- though a lot fewer than the six estimated in January.

- Key figures around 1030 GMT -

London - FTSE 100: DOWN 0.3 percent at 8,421.33 points

Paris - CAC 40: DOWN 0.6 percent at 8,193.04

Frankfurt - DAX: DOWN 0.3 percent at 18,814.89

EURO STOXX 50: DOWN 0.4 percent at 5,082.70

Tokyo - Nikkei 225: UP 1.4 percent at 38,920.26 (close)

Hong Kong - Hang Seng Index: UP 1.6 percent at 19,376.53 (close)

Shanghai - Composite: UP 0.1 percent at 3,122.40 (close)

New York - Dow: UP 0.9 percent at 39,908.00 (close)

Euro/dollar: DOWN at $1.0870 from $1.0886 on Wednesday

Dollar/yen: DOWN at 154.74 yen from 154.83 yen

Pound/dollar: DOWN at $1.2669 from $1.2681

Euro/pound: UP at 85.80 from 85.77 pence

Brent North Sea Crude: DOWN 0.3 percent at $82.47 per barrel

West Texas Intermediate: DOWN 0.3 percent at $78.38 per barrel

burs-rfj/lth

C.Kreuzer--VB