January 2, 2008 / 3:18 PM / 11 years ago

European shares fall as U.S. manufacturing contracts

LONDON, Jan 2 (Reuters) - European shares fell on Wednesday after a report showed U.S. factory activity contracted in December to its weakest since April 2003, adding to worries over the state of the global economy.

At 1512 GMT, the FTSEurofirst 300 index .FTEU3 was down 0.7 percent at 1,495.46 having traded little changed on the day right before the report was released at around 1,507.15 points.

The Institute for Supply Management said its index of national factory activity fell to 47.7 in December from 50.8 in November, below economists’ median forecast for a reading of 50.4. A reading below 50 indicates contraction in the sector.

Around Europe, Germany's DAX .GDAXI was down 1 percent, France's CAC 40 .FCHI fell 0.7 percent and Britain's FTSE 100 index .FTSE was down 0.1 percent.

European stock markets started the new year on a cautious note with investors still worried about the possibility of more fallout from a U.S. housing slump and high oil prices.

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