European shares eased on Tuesday from 40-month peaks after Federal Reserve officials hinted at further monetary tightening, but energy stocks capped market losses as worries over U.S. crude output underpinned oil prices.

BP and Royal Dutch Shell rallied around 1.5 percent each as oil prices stayed firmly above $65 a barrel and after JPMorgan upgraded its investment ratings on both stocks to “overweight”, help-ing the FTSE 100 up 0.1 percent.

But Anglo American fell 1.6 percent as a rise in the U.S. dollar pushed gold around $2 an ounce lower, with Bulgari another standout decliner after the Italian jeweller posted a greater-than-expected fall in first-half net profit.

By 1045 GMT, the FTSEurofirst 300 index of top European shares was 0.2 percent weaker at 1,219.5, having closed at a 40-month high of 1,221.96 points on Monday.

The narrower DJ Euro STOXX 50 fell 0.4 percent to 3,386 points, not benefitting from the FTSE's rise.

Investors’ attention remained on the macroeconomic picture after top Fed policy makers voiced growing concern that inflation pressures were building, stirring worries of more interest rate hikes at a time when growth in the world's biggest economy is showing signs of slowing down.

“Such (Fed) remarks confirm our view that the Fed at this point in time is rather more worried about inflation than about faltering growth”, said Astrid Frey at Sarasin, predicting further rate hikes before the end of the year despite a likely sharp fall in U.S. consumer confidence data.

The Conference Board's consumer confidence index, due at 1400 GMT, is tipped to have fallen to 95 in September from 105.6 in August, after oil refinery disruptions caused by a severe hurricane season pushed gasoline prices sharply higher.

Risk of further disappointing economic newsflow set a background for lower equity performance in the final quarter of the year, economists at investment bank JPMorgan said in a note. “The oil price at these levels appears to have started to affect consumer confidence and inflation expectations”, they said, adding that the rebound of the dollar against the euro deprived European equities from a key support.

Around Europe, Paris's CAC 40 shed 0.4 percent, while Frankfurt's DAX trimmed 0.5 percent and the Swiss Market Index was down 0.1 percent in Zurich – while U.S. index futures pointed to a mixed opening on Wall Street.

German technology giant Siemens was weaker after a report in Handelsblatt said the firm could incur significant losses from its acquisition of VA Technology.

On the upside, Porsche shares clawed back some of the previous day’s 10-percent dip as investors warmed to the idea of a closer cooperation between the luxury car maker and Volkswagen. Porsche said it wanted its investment in VW to generate a return of at least 10 percent.

<B>Marie MAITRE</B>