PARIS, May 29: European shares closed down in holiday-thinned trade on Monday as interest rate worries continued to gnaw away, although steel stocks again rose on hopes of further consolidation.

Corus was up 3 per cent in Amsterdam after takeover speculation in the steel industry was reinforced by news Russian billionaire Roman Abramovich is looking to buy a stake in London-listed Russian steelmaker Evraz.

Arcelor gained 4 per cent as news flow continued from its announcement on Friday that it plans to merge with Russia’s Severstal to block a hostile bid from Mittal Steel, which gained 5 per cent.

After settlement, the FTS Euro first 300 index of top European shares closed 0.14 per cent weaker at 1,322.45 points, while the narrower DJ Euro Stoxx 50 index slipped 0.55 per cent to 3,679.57 points.

Trading volumes were just a fraction of the usual daily average, with the London exchange and US markets closed for public holidays.

Worries about inflation and interest rates, which have knocked around 6 per cent off European markets in the past two weeks from near-five year highs, continued to cap sentiment despite a decent rebound last Thursday and Friday.

The GfK research group said German consumer sentiment is set to jump to its highest for nearly five years in June, supported by rising optimism on the economy which also heightens fears the European Central Bank might raise interest rates further.

“We might tread water in the next few weeks or couple of months until investors fully come to terms with the new situation we are in,” said Franz Wenzel at Axa Investment Managers in Paris.—Reuters