European stocks dip ahead of New Year's holiday

European stocks inched lower in early trade on Monday, with volumes expected to remain thin in a shortened session ahead of the New Year's Day holiday and with German, Italian and other European stock markets closed.

Recently hammered banking stocks edged higher, with HBOS up 1.2 per cent, Commerzbank up 0.5 per cent, and Bank of Ireland up 0.7 per cent.

HSBC was down 0.3 per cent. The Daily Mail said on Monday HSBC faces renewed pressure to overhaul its strategy after Calpers, the largest US pension fund, told the bank to address its share-price underperformance, refocus the group and set testing new financial targets by July 1.

At 0853 GMT, the FTSEurofirst 300 index of top European shares was down 0.09 per cent at 1,504.74 points. Europe's benchmark index, up a meagre 1.4 per cent on the year, is on track to record its worst annual performance since 2002.

Investors will not have much to digest during the session, with no corporate update and no macroeconomic data to be released during trading hours. US home sales data for November are expected at 1500 GMT.

"Trading floors are empty. We'll have to wait until at least next week to get some sort of direction," one trader said.

The UK's FTSE 100 index was down 0.3 per cent and France's CAC 40 was down 0.2 per cent.

Air France-KLM gained 1.1 per cent. Italy's Il Sole 24 Ore reported on Sunday that Air France-KLM plans to keep Alitalia as a separate company overseen by a board of trustees once it has taken over the Italian airline.

Miners fell, with BHP Billiton down 1.1 per cent, Rio Tinto down 0.8 per cent, and Xstrata down 0.3 per cent.

Game Group Plc surged 7.7 per cent after the British computer and video games retailer said it expected its full-year profit to be ahead of an average market forecast after continued strong sales in the run-up to Christmas.

London Scottish Bank Plc dropped 16 per cent after the British consumer lender said it would take a charge of up to 22 million pounds

($44 million) in its 2006/07 year to cover losses at its unsecured consumer credit business. (Reuters)