European stock markets closed lower on Tuesday, hit by more weak US economic data which pushed the euro to record highs against the dollar and raised fresh questions over the US economic outlook.

Dealers said the euro's jump through the historic 1.60 dollars level added to concerns about the currency's gains on eurozone exports while highlighting the continuing fallout from the US sub-prime home loan crisis.

Record high oil prices hit broader sentiment given prevailing worries over rising inflation driven by soaring fuel and food costs.

Recently, the stock markets have fared better as investors increasingly believed that the worst of the credit squeeze sparked by the US sub-prime crisis could be over but that view has come under pressure this week.

Dealers said disappointing results on Monday from Bank of America and the massive $24-billion cash call on Tuesday by Britain's Royal Bank of Scotland were unpleasant reminders of the damage caused by the US housing market woes.

Sales of existing US homes fell two percent in March to an annual sales pace of 4.93-million, weaker than the 4.95-million expected by Wall Street economists. Sales resumed their decline after a slight uptick in February.

The report also showed a 19.3-percent plunge in existing home sales, the largest segment of the housing market, while inventory rose 1.0 percent.

In London, the FTSE 100 index of leading shares fell 0.30 percent at 6034.70 points, in Frankfurt, the Dax 30 was down 0.86 percent to 6728.30 points and in Paris the Cac 40 lost 0.77 percent to 4872.64 points.

The Euro Stoxx 50 index of leading European shares shed 0.90 percent.

The euro was at 1.5996 dollars, coming off its highs above 1.60 dollars while oil topped 119 dollars in New York trade.

In Asia earlier on Tuesday, Japanese stocks fell 1.09 percent but Hong Kong rose 0.88 percent.

On Wall Street, the Dow Jones Industrial Average was down 0.93 percent at 4.45pm GMT, with weak guidance from Texas Instruments adding to the negative tone after the housing data.

"Some of the morning's weakness is tied to Texas Instruments where income exceeded expectations but was overshadowed by a cautious outlook," said Al Goldman, chief market strategist at Wachovia Securities.

Fred Dickson at DA Davidson said the projections going forward are seen as more significant than results from the past quarter.

"Even more reluctant than ever"

"Companies delivering positive earnings surprises, while fewer at this point in the current quarter than seen back in January, appear even more reluctant than ever to translate those positive surprises into upward earnings guidance for the full year," he said.

"Earnings warnings continue to dominate the guidance offered to investors even after companies deliver earnings that top estimates. Texas Instruments is a case in point."

In London, the banks were in focus after RBS, down 3.89 percent at 358 pence, said it would raise fresh funds of almost $24-billion to shore up its finances after huge sub-prime-related writedowns and the ABN Amro takeover.

RBS said it would also make further asset writedowns of £4.3-billion, or £5.9-billion before tax, arising this year from the credit crisis and resulting turbulence on financial markets.

The move sparked concerns other banks may have to similarly raise funds. Barclays fell 3.66 percent to 461 pence.

Elsewhere the oil companies posted solid early gains but then fell back on profit taking. BP added 0.44 percent to 576 pence.

In Frankfurt, mortgage lender Hypo Real Estate, was up 2.67 percent at 23.86 euros, on speculation of further takeover approaches but Deutsche Bank lost 1.37 percent to 75.45 euros.

In Paris, dealers said the euro's rise through 1.60 dollars was of concern.

Renault lost 2.37 percent to 65.22 euros after disappointing first quarter sales figures.

Elsewhere in Europe, Belgium's Bel-20 lost 0.80 percent, Madrid's Ibex-35 was down 0.99 percent, Italy's fell 0.45 percent, the AEX in Amsterdam shed 0.98 percent and Switzerland's SMI was off 0.89 percent.

AFP