European shares eased on Friday, with confidence in the global economy - and thus future demand - undermined by the looming budget cuts in theUnited States and by weak manufacturing data from China. Some $85 billion in U.S. government spending cuts are set to kick in from Friday, after politicians failed to reach a deal to prevent the measure, which is expected to cut growth in the world's biggest economy by around 0.5 percent. "Finally it seems that there will be no solution, no bargain and that means we will see $85 billion of spending cuts kicking in again," said Gerhard Schwarz, head of equity strategy at Baader Bank. "Certainly it will continue to the current wait-and-see attitude in markets." The FTS Eurofirst 300 was down 0.2 percent by 0801 GMT at 1,169.29 points.
Milan's FTSE MIB was one of the worst performers among the regional bourses, down 0.4. percent on the first day of a new Italian financial transaction, tax which is expected to hit volumes in cash equities and derivatives.