European shares slipped back from 28-month highs on Thursday, ahead of interest rate decisions at central banks but after a successful Spanish bond auction,
In early trading, the FTSEurofirst 300 index of top European shares was down 0.2% at 1,161.42 points, after rising 1.5% in the previous session to its highest close since September 2008.
The European benchmark is up nearly 80% from its lifetime low in March 2009.
Spain attracted strong demand at an auction of 5-year bonds on Thursday while the yield came in lower than expected, reflecting growing hopes that euro zone governments will take fresh action to ease the region's debt crisis.
Spanish banks rose sharply after the Spanish bond auction, and adding to Wednesday's rally after a Portuguese bond auction. Banco Santander and BBVA rose 4.6 and 5.4%, respectively.
"The Portugal bond auction has been a key catalyst (in driving the market higher)," said Jeremy Batstone-Carr, strategist at Charles Stanley. "Portugal has bought itself a bit more time. But charts indicate we're moving into overbought territory."
Tesco fell 2.2% to 412.05 pence after the world's No. 3 retailer missed Christmas sales forecasts, saying disruption from severe winter weather hit sales of non-food goods in its main British market.
Miners were lower as metals prices slipped, with copper falling back from near record highs.
Eurasian Natural Resources Corp., Vedanta, Xstrata fell between 1 and 1.4%. The energy sector was mixed as crude prices hovered near two-year highs.
Spain's Repsol rose 3.2% after reports India's Essar group is studying an acquisition of 5 percent of the company.
Across Europe, Britain's FTSE 100 fell 0.3%, Germany's DAX was flat and France's CAC40 rose 0.4%. Spain's IBEX35 rose 1.9%.
"There's a bit of consolidation going on," one London-based trader said, "and the volumes are not that great, and the retail results were mixed."
Among other British retailers adding to Tesco's downbeat news, Dixons, which runs the PC World and Currys chains, fell 7.3%. It said underlying sales fell 4% in the UK and Ireland.
HOME RETAIL RISES
On the upside, Home Retail gained 6.2% as the owner of the Argos catalogue chain said sales have fallen less than analyst forecasts.
Food producer Nestle fell 2.1%, after brokers downgrade the stock. BofA Merrill Lynch downgraded it to "underperform" from "buy", and Nomura to "reduce" from "buy".
The Bank of England and the European Central Bank are both expected to keep their respective interest rates at record lows.
British industrial output grew at its slowest annual pace since July in November, dragged down by continued weakness in the oil and gas sector and despite ongoing strength in manufacturing, official data showed.
Later, investors' attention will turn to U.S. economic data, such as weekly jobless claims and producer prices.
