European shares dip

London - European stocks dipped in late morning trade on Thursday, led by losses in telecoms shares, and markets were expected to take guidance later from two major European interest rate decisions.

Vodafone dropped 1.2% after newspapers reported that rival O2, a unit of Spain's Telefonica, was poised to clinch a deal to be the exclusive network partner for Apple's iPhone in the UK. Telefonica was flat. BT and Deutsche Telekom also declined.

By 08:55 GMT, the pan-European FTSEurofirst 300 index was down 0.3% at 1 615.7 after falling as much as 0.4%. The index rose as much as 0.3% earlier in the session, supported by increases in Asian markets.

"Trading is volatile, but it's a thin-volumes day," said a trader. US markets are due to resume trading on Thursday after a holiday.

The FTSEurofirst index rose in the past two sessions and is up nearly 9% so far this year on a boom in takeovers and robust earnings reports.

The euro hit a two-month high against the broadly weaker dollar at above $1.3640.

Around European bourses, London's FTSE 100 fell 0.2% and Paris's CAC-40 lost 0.2%. Frankfurt's DAX declined as much as 0.9%, with some traders citing unconfirmed reports of a truck explosion in Germany.

A truck caught fire on a motorway in Germany, but police later said they had no information indicating that the incident had been caused by an attack.

The DAX index pared losses to trade down 0.5%.

Rate decision

Financial markets will look to interest rate decisions later in the day for direction.

The European Central Bank is expected to leave interest rates on hold after tightening credit costs to a near six-year high of 4% last month. The ECB unveils its decision at 11:45 GMT followed by a news conference at 12:30 GMT.

"In Europe, higher interest rates are reflecting stronger growth, then that's taken by the market as being okay," said Sharon Bell, European portfolio strategist at Goldman Sachs.

"But elsewhere in the UK, there's a bit of risk now in terms of the household sector, and what the impact is of rate rises we have already seen," she added.

"And in the US as well, there's some concern in terms of the split in terms of the ultimate effect on the housing market."

The Bank of England's Monetary Policy Committee is widely expected to raise rates by 25 basis points to 5.75%, and a decision is due at 11:00 GMT.

Among European gainers, Airbus parent EADS rose 1.8% after a Dubai-managed fund bought a 3.1% stake in the company, saying it believed a restructuring plan announced this year would help the struggling European planemaker regain investor confidence.

Miners rose, with BHP Billiton up 1.3% and Anglo American adding 0.8%, tracking advances in base metal prices.