European shares slipped back from 29-month highs on Tuesday, after China increased interest rates again to fight stubbornly high inflation, raising concerns about economic growth. Chemical makers featured on the downside. Givaudan slipped 3.5 percent after the flavour and fragrance maker proposed a smaller-than-expected dividend and said high raw materials prices would weigh on margins.
Other stocks to fall included miners Kazakhmys, ENRC, and Vedanta, down between 0.6 and 1.4 percent. However, other miners had cut their losses by the end of the session.
The pan-European FTSEurofirst 300 index of top shares fell 0.1 percent to close at 1,176.28 points, having hit its highest close since September 2008 in the previous session.
Investors became nervous about the global recovery when China's central bank said its benchmark deposit and lending rates would be raised by 25 basis points.
The European benchmark is up more than 82 percent from its lifetime low of March 2009, with several major economies having emerged from recession, helped by stimuli from governments and central banks world-wide.
Batty, like most other strategists does not anticipate the European Central Bank or Bank of England raising rates in the near tern. The BoE announces will announce a decision on Thursday.
Across Europe, the FTSE 100 index ended the day 0.7 percent higher, Germany's DAX was up 0.5 percent and France's CAC 40 was up 0.4 percent.
On the upside, carmakers were in demand, with the STOXX Europe 600 Automobiles & Parts jumping 3.3 percent.
German premium carmaker BMW gained 4.7 percent after group unit sales rose in January and it said it expected strong growth to help it reach its 2011 target.
Bullish forecasts from major car firms lifted hopes for the sector, as the likes of Toyota and French parts maker Faurecia set out new goals for 2011 based on strong growth.