European shares flirted around unchanged levels yesterday afternoon in thin year-end trade as renewed dollar weakness hurt exporters, but pay-TV operator BSkyB was a bright spot after a deal with EU regulators.
The agreement with the European Commission eased the Rupert Murdoch-controlled group's grip on broadcasting of England's top soccer league, but stopped well short of investors' worst fears as it left the company with the vast majority of matches. Its shares rose three per cent on the news.
A mixed opening on Wall Street failed to lend clear direction to equity markets this side of the Atlantic.
But the rise of the euro to a fresh record high against the dollar hit European exporters once more. Paper and forestry duo UPM-Kymmene and Stora Enso fell two per cent each after Deutsche Bank said the continued weakness of the dollar restrained the potential for earnings recovery in the sector.
By 1445 GMT, the FTSE Eurotop 300 index was flat at 935 points, while the DJ Euro Stoxx 50 index was down 0.4 per cent at 2,685 points.
Strategists expected markets to meander as a thinning corporate and macroeconomic agenda until the year-end made it difficult for investors to plan their next move.
But more evidence that the global economy is on track for recovery and signs that many companies are slowly starting to become more bullish on business conditions may provide fodder for fresh equity gains when January comes, they said.
"The strength of the US recovery is being confirmed and the non-inflationary environment adds to prospects of a monetary status quo for a prolonged time," said Valerie Plagnol, chief economist at Paris broker CIC Securities, pointing to solid US industrial production data published on Tuesday.
Across Europe, benchmark indexes in Paris, Frankfurt and Zurich were all down 0.4 per cent, but London outperformed as banking stocks and BSkyB helped hoist the FTSE to a gain of 0.5 per cent.
Steel maker and engineering group ThyssenKrypp dropped five per cent after Deutsche Bank cut its rating on the German company to a cautious "hold" from "buy", saying the stock had already benefited from the early stages of economic upturn.
On the wider market, British software company Misys was a sharp decliner, off 18 per cent at a six-month low after reporting first-half revenues down about 10 per cent year-on-year, with operating margins also falling.
But shares in Germany's Deutsche Boerse rose five per cent amid market talk that US regulatory authorities may soon decide on futures exchange Eurex's application for a licence in the United States.