Reuters writes: “O2, which is owned by Madrid-based Telefonica, on Thursday declined to be drawn on newspaper reports that the company was poised to clinch the first European iPhone deal with Apple, the innovative U.S. consumer electronics group.”

“Shares in Vodafone Group Plc, which jumped last week partly on hopes the group would secure an exclusive, pan-European iPhone deal, slipped by more than two percent by the close. Telefonica, Deutsche Telekom and France Telecom traded broadly flat in a weaker European telecoms market.”

“Some analysts noted that Apple, whose iPhones combine its hugely popular iPod digital music player, a video player and Web browser, looked set to mimic the three-country strategy it used to launch its iTunes online music store in Europe in 2004.”

“Apple was criticized in the United States for striking an exclusive deal of at least two years with the largest U.S. telecoms network operator, AT&T Corp, because some customers might suffer weak signal strength despite paying $499-$599 for a handset on top of a pricey two-year contract.”

“And the handset itself also it critics. Some U.S. users have complained that the touch screen is cumbersome, that data speeds are too slow and battery life too short.”

“But others applaud Apple for its design creativity and its ability to create “status symbol” gadgets that consumers crave. “The iPhone is just glamorous,” noted one analyst.”