European stocks end flat, oil stocks track crude

European shares closed marginally weaker yesterday to end the week flat as investors digested a patchy start to the fourth quarter earnings season and as oil stocks rose on higher crude prices.

Shares in Finnish mobile phone giant Nokia fell 1.6 per cent, extending declines for a fourth day on nervousness ahead of its fourth quarter results and company update next Thursday.

By 1631 GMT, the FTSEurofirst 300 index of pan-European blue chips was unofficially closed 0.1 per cent weaker at 1,048 points, within a point of where it started the week.

The narrower DJ Euro Stoxx 50 index rose 0.1 per cent to 2,941.1 points.

"My view is that we are going to be drifting higher in the coming days and weeks," said Akber Khan from Deutsche Bank's European equity focus team.

"There is a general increase in optimism, and risk appetites are gradually increasing - the key word is gradually."

In New York, better than expected results from General Electric helped stocks rise off 2005 lows.

The blue-chip Dow Jones industrial average was 0.2 per cent firmer at 10,496.7 points, while the Nasdaq Composite Index rose 0.5 per cent to 2,057 points.

US stocks have underperformed their European counterparts this year, and a number of investors are taking bets that the normally strong correlation between the two markets will continue to diminish, Khan said.

Around Europe, London's FTSE 100 closed 0.1 per cent firmer, while Paris's CAC-40 ended up 0.3 per cent. In Zurich the SMI rose 0.2 per cent, but Frankfurt's DAX closed 0.1 per cent weaker. Mining stocks outperformed, with Rio Tino up 2.9 per cent, BHP Billiton up 1.4 per cent and Anglo American up 1.1 per cent.

UK broker Numis Securities raised its earnings forecasts for several London-listed miners, citing strong global demand for coal and iron ore and suggesting that China's appetite for raw materials is showing few signs of abating.

"There will be a continued importing of bulk raw materials into China to feed what is effectively existing economic growth from the last three years," Numis analyst John Meyer said.

Oil stocks also fared well as crude prices jumped nearly three per cent. Ongoing cold weather in the United States was expected to boost demand for winter fuels. Shell was a standout, up 2.4 per cent.

"The trend is still there to buy defensives and high-yield stocks," one Amsterdam-based dealer said.

French utility Suez added 2.6 per cent a day after signalling a 13 per cent rise in its 2004 dividend.

Tiscali jumped 11 per cent after Telecom Italia confirmed its interest in the Italian Internet company's long-distance fibre network.

Among other stocks to rise, German industrial group ThyssenKrupp gained 1.8 per cent after raising its full year earnings guidance and posting another set of forecast-beating quarterly profits.

German bank HVB said it would write €2.5 billion off the value of property loans in 2004 and suspend its dividend. But its shares closed flat regardless of the bad news, and dealers cited talk that the bank could become a takeover target.