Eurostocks mixed; rate jitters offset oils, miners

European shares ended yesterday mixed as uncertainty over US interest rates ahead of a key Federal Reserve meeting subdued trading and offset solid gains by heavily-weighted oil and mining stocks.

Italy's flagship airline Alitalia slid 13 per cent on fears the loss-making group could go bankrupt if marathon talks between management, unions and the government fail to come up with a rescue plan that includes job cuts.

Bullish earnings reports came from Swiss banking giant UBS, Dutch food group Numico, Swiss speciality chemicals maker Clariant or German tyre and car parts maker Continental.

But investors were preoccupied by the Federal Open Market Committee, braced for a post-meeting statement that could mark the beginning of the end of the lowest US interest rates in 46 years.

The Fed was not forecast to hike rates but investors anticipate comments suggesting this could happen as early as the summer, as the central bank is forced to acknowledge robust US economic growth and signal inflation as a potential worry.

The FTSE Eurotop 300 index of pan-European blue chips ended up 0.4 per cent at 1,003.3 points, but the narrower DJ Euro Stoxx 50 index shed 0.2 per cent at 2,799.7.

On Wall Street, the Dow Jones industrial average was 0.2 per cent lower at 10,292 points, while the Nasdaq Composite was flat at 1,938 points by 1535 GMT.

Miners were among the session's biggest climbers after Rio Tinto buoyed the sector by saying it had not seen any let-up in demand from China, soothing fears that voracious Chinese demand for metals and allied raw materials had peaked.

Britain's Xstrata, Anglo-American and BHP Billiton rose between 2.8 per cent and 3.5 per cent each.

Oil majors Shell and BP gained as crude oil prices rose shot up as violence in the Middle East and low US fuel stocks stocks concern over world supplies.

Other firms were rewarded for pleasing earnings. Numico's forecast-topping quarterly results propped its shares up 5.8 per cent while Clariant closed up 0.6 per cent at €16.65 after better-than-expected results and comments that it saw early signs of a pick-up in the United States and in Asia.

Continental's shares rose nearly one per cent to €37 after the German auto supplier said it could beat its 2004 profit guidance if the economic upswing continued.

But Norske Skog, the world's second-largest newsprint maker, disappointed investors with lower-than-expected first quarter operating profits and comments that 2004 would be a weak year, sending the stock four per cent lower.

Shares in German retailer KarstadtQuelle slipped 4.7 per cent to €17.12 after it posted lower first-quarter sales and earnings and forecast a steep operating loss this year.