European shares fell on Wednesday with financial stocks lower on renewed concern about the extent of the credit crisis. This offset gains in oil stocks while investors turned cautious ahead of U.S. economic data.

Among major decliners, shares in ArcelorMittal slipped 1.2 percent after the world's largest steel group said it would buy iron ore producer Wabush Mines in Canada.

ArcelorMittal was the strongest negative weight in the FTSEurofirst 300 index of top European shares, which fell 0.1 percent to 1,547.82 points at 4:31 a.m. EDT.

The markets will eye key economic date for clues on the impact of the recent credit market turmoil on the overall economy and on the course of the Federal Reserve's interest rate policy.

Sporadic efforts by the central banks to grease the wheels are unfortunately proving ineffective, Societe Generale wrote in a note. The Fed is holding out the carrot of a rate cut in a fortnight's time. However not even that is helping to calm the tensions.

While the general expectation is for the Fed to cut its benchmark fed funds rate at the September 18 meeting, there is caution ahead of the data flow including U.S. ISM non-manufacturing on Thursday and non-farm payrolls on Friday.

In focus on Wednesday will be U.S. ADP employment data at 1215 GMT for its possible impact on the high-profile payrolls report on Friday. July pending home sales and the Fed's beige book summary of the economy's performance are also due.

Investors are also awaiting Thursday's interest rate decisions by the European Central Bank and the Bank of England.

Germany's DAX index was down 0.1 percent, UK's FTSE 100 index rose 0.1 percent and France's CAC 40 fell 0.2 percent.

Financial shares fell as concern about the subprime crisis came to the fore again with Alliance & Leicester, Northern Rock and insurer Legal & General all down around 1 percent.

The subprime crisis is not over yet, even though some might say so, one trader said.

PSA Peugeot Citroen dropped 2.6 percent and was among the biggest decliners on France's CAC 40, after markets were unimpressed with the French car maker's targets set on Tuesday.

ABB fell 1.1 percent after the Swiss engineering group doubled its medium-term sales target and said it was looking for acquisitions.

These are excellent and strong projections - but have already been widely discounted. Some momentum money will inevitably exit the stock today, Morgan Stanley wrote in a note.

Energy stocks bucked the trend with BP, Total and Royal Dutch Shell all up about 1 percent as U.S. crude stayed above $75 a barrel.

Total also said it would pay an interim dividend of 1 euro per share for fiscal year 2007, a rise of 15 percent from the 2006 interim dividend.

Miners gained as traders cited talk of a possible break-up approach for Rio Tinto by BHP Billiton and Brazilian miner CVRD.

BHP Billiton is not immediately available for comment, while a spokesman for Rio declined to comment.

(Additional reporting Michael Taylor and Blaise Robinson)