LONDON, July 31: European shares turned mixed on Wednesday afternoon after data showed the US economy slowed sharply, knocking Wall Street in early trade and countering positive earnings news from Unilever.

Data showed the world’s biggest economy grew by just 1.1 per cent during the April-June second quarter — half the 2.2 per cent rate estimated by Wall Street economists and a long way short of the blistering but downwardly revised 5.0 per cent pace posted in the first three months of the year.

Mathew Wickens, global economist for ABN Amro said the report, taken together with recent stock market weakness and its negative impact on consumer confidence, placed a question mark over the sustainability of economic growth in the second half of the year.

This is one for the double-dippers.

But strategist Rolf Elgeti of Commerzbank was less convinced of the GDP report’s significance, arguing that it confirmed what investors already knew — that the economic recovery was shallow.

More important for markets is company earnings, and so far from the Old Economy they have been okay, he said.

The FTSE Eurotop 300 index of pan-European blue chips was 0.4 per cent higher, having earlier been nearer up three per cent, while the narrower DJ Euro Stoxx 50 index added 0.44 per cent.

But benchmarks in Frankfurt and Madrid were slightly down.

In New York, the Dow Jones industrial average was off 0.13 per cent and the tech-laden Nasdaq Composite slipped 0.86 per cent.

Europe’s biggest consumer products group, Anglo-Dutch Unilever, led the blue chip risers after reporting higher-than-expected second-quarter core earnings and raising its 2002 forecast.

Its shares rose 6.4 per cent and Merrill Lynch said it was restarting coverage on the stock as a “strong buy” and added it to its top picks list.—Reuters