European stock markets dipped on Thursday as traders took profits one day after Wall Street hit its highest level since October 2008 on a wave of better-than-expected US company earnings news.

Markets caught their breath after the spectacular rally that pushed the Dow Jones Industrial Average above 10 000 points ? a significant marker that heralds the possibility of another spurt on the stock markets.

"The crossing of the 10 000 level sets up a potential near-term turning point for stocks," said Scott Marcouiller, senior equity market strategist at US investment company Wells Fargo Advisors.

"Our belief is after a potential very near-term further bounce, it will then lead to some normal modest profit taking. We don't expect the selling will get very far because the market has remained resilient into any setbacks."

London's FTSE 100 index of leading shares closed down 0.63 percent at 5222.95 points, the Paris Cac 40 edged up just 0.03 percent to 3888.83 points and the Frankfurt Dax lost 0.40 percent to 5830.77 points.

Elsewhere in Europe, Amsterdam dipped 0.09 percent, Madrid fell 0.18 percent, Zurich was down 0.35 percent and Milan lost 0.03 percent.

In Asia, signals from Australia's central bank chief about future interest rate rises helped boost optimism about the region's economic outlook.

Stocks rose 1.77 percent in Tokyo and by 0.60 percent in both Sydney and Seoul. Hong Kong gained 0.51 percent while Shanghai closed up 0.31 percent.

But Bangkok dropped 5.30 percent amid concern over King Bhumibol Adulyadej's health despite assurances from the palace that his condition was "good."

"It's a major concern," an analyst with a Bangkok-based brokerage told AFP, asking not to be named. "The king is a key institution for political stability in Thailand so the market is closely watching his health."

Investors this week have cheered stronger-than-expected results from computer chip giant Intel and Wall Street banks JPMorgan Chase and Goldman Sachs, propelling the Dow above 10,000 points on Wednesday.

It was the Dow's highest level since 7 October 2008 when markets were in freefall following the collapse of US investment bank Lehman Brothers.

"The bulls in the market appear to have the bit between their teeth and are ceaselessly charging forward," said Stuart Bennett, an economist at French investment bank Calyon. Ian Williams, a strategist at Altium Securities, a European investment banking group, said: "The US reporting season is ? so far ? delivering exactly what the world's equity investors wanted."

But analysts said European equities were hit by profit-taking as well the announcement in london that Swiss-based mining giant Xstrata has scrapped its merger bid for rival Anglo American.

"Xstrata's announcement that it will not make a bid for rival Anglo-American has knocked the FTSE, with Anglo American the biggest faller on the blue-chip index," said analyst Anthony Grech at spread-betting firm IG Index.

Shares in Anglo American plunged 4.11 percent to 2216 pence, while Xstrata also gave up 2.04 percent to end at 1010 pence.

British Airways dropped 1.78 percent to 220.9 pence amid concern over rising fuel prices, while Sainsbury's supermarket chain jumped 10.09 percent to 342.5 pence on rumours it could be bought by Qatari sovereign wealth fund QIA.