European shares retreated from 2003 highs yesterday as banks weighed after a cautious outlook from Credit Suisse and as Commerzbank was hit despite denying market rumours of a profit warning.

French retailer Pinault Printemps Redoute also slipped after Gucci?s Chief Executive Domenico De Sole and top designer Tom Ford announced their resignation after failing to secure management autonomy as PPR prepares to take full control in six months. PPR shares fell 4.3 percent.

But French electronics maker Thomson was a bright spot after news the French state was finally selling its remaining 18.5-percent stake in the company, lifting stocks overhang fears that weighed on the stock?s valuation.

By 0950 GMT, the FTSE Eurotop 300 index of pan-European blue chips was down 0.2 percent at 936 points, while the narrower DJ Euro Stoxx 50 index slipped 0.1 percent to 2,629 points.

The benchmark Eurotop 300 index surged to its highest level for 2003 on Monday, spurred by solid US manufacturing data that added to a scenario of sustainable economic recovery.

Investors? attention reverted to the macroeconomic news front after the third-quarter earnings season drew to an end, with numbers having on average met or exceeded expectations.

?There are very few hurdles for markets between now and January when we get the previews of the likes of Intel, and there are plenty of growth opportunities on the macro front with all the data looking bullish?, said Nomura strategist Anais Faraj.

?Business spending in the US will be the main dynamic pushing the market forward and unemployment the only wild card.?

US October non-farm payrolls are due on Friday and economists expect them to have risen by 55,000, leaving the world?s largest economy?s unemployment rate at 6.1 percent.

Around Europe, London was down 0.1 percent, Frankfurt slipped 0.1 percent, Paris was off 0.3 percent and Zurich shed 0.5 percent. US futures were flat, pointing at an uninspiring start for Wall Street.

Credit Suisse beat market forecasts with a surge in third-quarter net profits helped by cost cuts and asset sales but fell 3.2 percent after warning more pain was needed to cement its earnings turnaround.

Shares in Commerzbank also sagged four percent, their biggest one-day drop since mid-June, despite the German bank denying market talk of a profit warning to say it would make an operating profit in the third quarter.

An upgrade by Deutsche Bank, which raised its target price on Commerzbank to 19 euros from 16.7 euros, seemed to have very little positive impact on the stock.

Smaller domestic peer Depfa Bank fell 3.2 percent after Depfa Holding said it would sell its 40.8 percent stake in the German specialist public sector finance bank on the market via an accelerated bookbuilding process led by Merrill Lynch. But Thomson was two percent higher as Citigroup and Goldman Sachs placed about 18.5 percent of the French electronics maker on behalf of the French state, Thomson and Citigroup said.

?Now finally Thomson is entirely in the hands of investors which makes it more liquid,? Sandeep Deshpande, equity analyst said. ?The whole of the government stake overhang has gone, which is a relief for existing shareholders as well.?

The announcement came barely a day after Thomson said it and China?s TCL International Holdings would combine their television and DVD businesses to create the world?s biggest TV maker.

Another strong climber was Dutch retailer Ahold, up 4.5 percent ahead of Friday?s first-half results and detailed strategic and funding plans. The Financial Times reported that the group?s long-anticipated rights issue of at least two billion euros ($2.29 billion) will have a discount of 20 percent to the market price.

Marie Maitre