European shares fall early

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By 8.50 a.m., the FTSE 100 index was down 17.5 points, or 0.3 percent, at 6,059, as shares fell across Europe.

Services group Rentokil tumbled more than 23 percent after it said profit this year would be well below 2007 levels as it takes steps to revive its struggling parcels delivery business, and said its chairman was stepping down.

"Mixed results are always a consequence of what happens when you get a turning point in the cycle, and I'm afraid that's precisely where we are right now," said Peter Dixon, an economist at Commerzbank.

"It's not terrible... but it's not a set of results which would have me changing my bearish view on equities," he added.

Cushioning the index's losses, Royal Bank of Scotland (RBS) rose 1.7 percent after Britain's second-biggest bank, which last year led a takeover of ABN AMRO, reported a 9 percent rise in underlying profit, in line with expectations, and lifted its dividend by 10 percent.

But RBS raised its writedown on assets tarnished by the U.S. subprime housing crisis and credit crunch to 2.13 billion pounds, including ABN's wholesale banking business.

All other UK banks fell, apart from HSBC which edged higher, as worries over the financial sector and the state of the U.S. economy continued to put pressure on equity markets.

Recent data has raised fears of stagflation in the world's largest economy, as growth slows but price pressures continue to build. Federal Reserve Chairman Ben Bernanke indicated on Wednesday he was ready to cut interest rates again to avoid further deterioration in the U.S. economy and will testify at 3 p.m. British time before the Senate Banking Committee.

Britain's largest insurer Aviva added 3.5 percent after it beat expectations with a 1 percent rise in 2007 operating profit as strong growth in the U.S. and European life divisions helped offset the heavy cost of Britain's summer floods.

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