Eurostocks trim week's hefty gains, Ericsson surges

European blue-chips succumbed to mild profit-taking yesterday, but the bulk of the week's gains remained intact and analysts said the market looked poised to advance further as it heads into the thick of earnings season.

German drug's group Schering led the market lower as investors took profits in the week's big gainers such as aerospace giant EADS, leaving the broader market around one per cent weaker as most European markets shut.

"I suppose we shouldn't be surprised there's a bit of profit-taking, given the move we've seen in certain share prices, but given that scenario I think this correction is very mild," said Alia Baig, head of equities at AXA Investment Management.

"The next stage one would expect to see is asset switching out of bonds into equities. There are fundamental reasons to do it anyway, given the strength of the bond market, but I think the fact that we've had a rally this week will make asset allocators a bit more confident," Baig added.

Swedish telecoms equipment maker Ericsson provided one of the day's bright spots, surging 14.9 per cent in late trade after remarks from the firm that its key systems unit was close to break-even in the third quarter.

The stock had started the day down 9.9 per cent after cutting its mobile systems sales forecasts for this year.

At 1440 GMT, with only Frankfurt still trading, the FTSE Eurotop 300 index of pan-European blue chips was down 0.6 per cent at 909 points, but up about six per cent for the week.

The narrower DJ Euro Stoxx 50 index was 0.5 per cent weaker at 2,523 points.

In New York, the Dow Jones industrial average was up 0.2 per cent at 8,290 points, while the tech-heavy Nasdaq Composite rose 0.6 per cent.

"We've recovered pretty much in a straight line, and the fact we're down just 0.6 per cent today says a lot about where we'd got to and that the market was genuinely oversold," said a markets analyst at Deutsche Bank.

"We've definitely formed a base," he said, adding that the market's performance next week would depend on corporate news flow.

Results from corporate giants like Syngenta, Nestle, DaimlerChrysler and GlaxoSmithKline Plc take centre stage next week.

Schering slumped by 12.3 per cent and led the blue chip losers after the US Food and Drug Administration dealt a blow to the German drugmaker's hopes of introducing its flagship hormone treatment into the United States.

Shares in Europe's second-biggest drugmaker AstraZeneca and France's Aventis wilted in sympathy, falling 0.6 per cent and two per cent, respectively.

Elsewhere, British mortgage bank Abbey National ditched 8.2 per cent after Bank of Ireland withdrew its takeover offer. The announcement came hours after Abbey hired a former senior Swiss banker to help turn the struggling bank around.

Tech stocks continued to draw strength from a bullish batch of earnings reports this week, chiefly from global tech benchmark International Business Machines, European bellwether Nokia and software giant Microsoft.

Microsoft said late on Thursday that quarterly earnings had more than doubled, topping cautious Wall Street estimates.

In Europe, French software maker Business Objects rose seven per cent, German chipmaker Infineon added 6.3 per cent and Nokia firmed 1.4 per cent.