LONDON, July 4: European stock markets fell on Tuesday, driven down by the auto sector in muted trading amid a shut-down on Wall Street owing to the Fourth of July holiday in the United States, dealers said.

London's FTSE 100 index of leading shares slipped 0.37 per cent to 5,862.90 points in afternoon trade, Frankfurt's DAX 30 index lost 0.15 per cent to 5,704.34 points and in Paris the CAC 40 shed 0.42 per cent to 4,959.51 points.

The DJ Euro Stoxx 50 index of leading eurozone shares declined 0.23 per cent to 3,654.65 points. The euro stood at $1.2797.

Japanese share prices rose for the fourth day in a row on Tuesday when overnight gains on Wall Street provided another boost to already upbeat market sentiment over the domestic economy, dealers said.

US shares had closed with gains on Monday in a holiday-shortened session, with little on the corporate burner and investors appearing to shrug off an industry report showing a manufacturing slowdown.

The auto sector was meanwhile in focus across Europe, with shares in Volkswagen, DaimlerChrysler, Peugeot and Renault all declining.

In Frankfurt, German car giant Volkswagen dropped 1.09 per cent to 54.60 euros.

Dealers said the fall was owing to the euro strengthening against the dollar, which makes the cars more expensive for customers paying in the US currency.

German-US group DaimlerChrysler dropped 1.08 per cent to 38.35 euros amid the strong euro and also after the auto giant said US passenger car sales fell 13 per cent in June compared with the same month in 2005.

In Paris, French car maker Peugeot gave up 1.05 per cent to 48.79 euros amid a forecast by market research analysts Xerfi that French car sales will be lower in 2006 compared with a year earlier.

French rival Renault, meanwhile, slid 1.96 per cent to 82.55 euros after news that the board of directors of General Motors Corp. was studying a proposed alliance with Renault-Nissan.—AFP