European equities edged lower on Friday, with the key index hovering around 1,000 points, as weaker miners offset telecom shares that rose after Telefonica (TEF.MC) offered bigger-than-expected dividends.

At 0831 GMT, the FTSEurofirst 300 .FTEU3 index of top European shares was 0.1 percent lower at 999.85 points after rising 1.3 percent in the previous session. The benchmark index is up 20 percent this year and has surged 54 percent since hitting a record low in early March.

Miners lost ground as metals prices retreated on concerns over demand, rising stock levels and a firmer dollar. Copper MCU3 fell 1 percent, aluminium MAL3 was down 0.5 percent and nickel MNI3 shed 0.9 percent.

Miners BHP Billiton (BLT.L), Anglo American (AAL.L), Antofagasta (ANTO.L), Rio Tinto (RIO.L), Xstrata (XTA.L) and Eurasian Natural Resources (ENRC.L) fell 0.9-1.9 percent.

Analysts said that the market might consolidate recent gains and wait for more earnings results before marching higher.

There is a little bit of caution in the market. We could see in the next couple of weeks that the market is stabilising or just a little bit higher, as better-than-expected earnings results are already factored in, said Koen De Leus, economist at KBC Securities.

He said investors needed to see much higher-than-expected earnings numbers to boost the market.

Telecommunications shares were among top gainers, led by Europe's largest telecom company Telefonica which said it would hike its dividend per share to 1.40 euros next year, up from 1.15 euros in 2009, far outstepping analyst expectations for 1.27 euros per share.

Telefonica rose 2 percent, while Carphone Warehouse (CPW.L), Portugal Telecom (PTC.LS) and Swisscom (SCMN.VX) rose 0.5 to 1.6 percent.

BT (BT.L) rose 1.6 percent. The company is to more than double the number of homes able to use its ultra-fast broadband network in a big expansion of its original next-generation infrastructure plans, the Financial Times said.

Banks recovered after early losses, with HSBC (HSBA.L), BNP Paribas (BNPP.PA), Credit Agricole (CAGR.PA), UBS (UBSN.VX) and Credit Suisse (CSGN.VX) rising 0.2 to 0.7 percent.

In macroeconomic news, Germany's trade surplus narrowed unexpectedly in August as exports fell for the first time in four months, tempering hopes of robust third quarter growth in Europe's largest economy.

Across Europe, Britain's FTSE 100 index .FTSE, Germany's DAX .GDAXIand France's CAC 40 .FCHI were nearly flat.