(Updating with full report)
LONDON (Thomson Financial) - Leading European shares ended lower on weakness in interest-sensitive sectors, but a surge in prices for computer memory chips boosted a number of semiconductor companies.
The Dow Jones STOXX 50 Index was down 41.93 points at 3,936.85 while the DJ Stoxx 600 Index fell 4.01 points to 393.84. The DJ Euro STOXX 50, which tracks the performance of blue-chip companies in 12 countries using the euro, fell 56.95 points to 4,488.66.
By sector, financial services, industrial companies, auto makers, construction groups and technology led the decliners.
The energy sector outperformed, helped by the rise in crude oil prices sparked by supply concerns linked to a general strike in oil-rich Nigeria.
A spike in prices for Dynamic Random Access Memory, or DRAM chips used in personal computers boosted DRAM-chip maker Infineon Technologies, which saw its stock rise 1.2 pct in a down market.
Chip equipment maker ASM International NV also benefited, with its stocks gaining 1.4 pct.
According to DRAMexchange, dynamic random access memory (DRAM) prices spiked 17 pct yesterday and a further 4.1 pct to 2.30 usd this morning due to production problems and expectations of higher demand.
If spot prices sustain the upward trend this month, DRAMexchange said it anticipates higher DRAM contract prices in July ahead of the upcoming personal computer (PC) buying season in the second half of the year.
Elsewhere, shares in EDF shot up close to 8 pct in intraday trading, which saw the French utility briefly step ahead of Total as the company with the largest market capitalization on the CAC-40 Index.
EDF shares were buoyed by reports that the French government might be forced to sell down some of its 87.3 pct stake to pay for newly announced tax relief measures, and after a number of brokers issued bullish notes on the group's prospects.
SG Secs raised its price target to 88 eur from 66 eur and reiterated its 'buy' rating, citing the positive outlook for nuclear power.
UBS was even more upbeat, with the broker lifting its price objective to 100 eur from 80 eur.
But by the close EDF shares had pared gains to end up just 3.4 pct, lowering its market cap to 135 bln eur compared to Total's market cap of 142 bln eur.
Shares in Luxottica Group shot up 7.5 pct to all-time highs after the Italian eyewear maker said it would acquire US peer Oakley for about 2.03 bln usd in cash, saying the deal is expected to generate 100 mln eur of annual synergies.
'Every time Luxottica makes an acquisition, the shares rise due to cost savings,' an analyst at an Italian brokerage said, adding that she will 'certainly' hike her 26.4 eur target price on the stock.
'It's a very good deal,' another market player said.
Clarins added 3.8 pct after a report in business weekly Challenges that the group's management has told employee representatives that 'signs of interest' in the company have been shown by PPR and LVMH.
The magazine, which did not name its source, said that since the death in March of founder Jacques Courtin-Clarins, the company has also attracted the attention of L'Oreal.
Shares in Hermes added 0.9 pct pulling back opening gains as investors shrugged off the group's reduced sales growth forecast for the year.
'The current share price, in our view, provides a good entry point,' said broker ESN. 'We think Hermes, despite its limited equity partnership structure, benefits from speculative appeal.'
In addition, it has a unique brand and significant growth potential both in terms of products and expanding sales in regions where it is underrepresented, the broker said. ESN holds an 'Accumulate' rating on the stock.
AIM-listed luxury brand Mulberry Group PLC climbed 2.3 pct after its full-year earnings statement.
The group said pretax profit rose to 6.21 mln stg from 6.13 mln stg last year as turnover increased 4 pct to 45.1 mln stg boosted by sales from its core accessories business.
London Stock Exchange ended down 1 pct after it confirmed that it is in merger talks with Borsa Italiana, the owner of Milan's stock exchange.
And Bolsas y Mercados Espanoles SA shares were up 2 pct on hopes the move is a sign there will be further consolidation in the sector.
In broker news, Nokia fell 3 pct after Goldman Sachs downgraded it to 'neutral' from 'buy' on valuation grounds, with Citigroup reiterating its 'hold' rating and 1,370 pence target.
Mark.cotton@thomson.com mc1/rfw COPYRIGHT Copyright AFX News Limited 2007. All rights reserved. The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News.
© 2007 AFX News