Europe shares erase losses after Greenspan comment

Pan-European shares closed flat yesterday, recovering from earlier losses after upbeat comments from Federal Reserve Chairman Alan Greenspan, while Italian bank Mediobanca surged on takeover rumours.

Mr Greenspan said the US economy was on "a reasonably firm footing" and that interest rates could continue to rise "at a measured pace".

Recent conflicting signals from the US central bank had left markets wondering whether rate hikes were coming to an end.

By 1530 GMT, the FTSEurofirst pan-European 300 index had unofficially closed flat at 1,123.6 points after the previous session's 0.3 per cent fall.

The index, which hit three-year highs this week, is up nearly eight per cent so far this year.

The narrower DJ Euro STOXX 50 index was four points lower at 3,121.9 points.

"The markets got a little bit of relief from Greenspan," said Lorenzo Codogno, co-head of European economics at Bank of America.

"It looks a little bit on the hawkish side, and he continues to give the impression the Fed is posed for a hike and will continue in August."

Shares on Wall Street opened down and moved into positive territory directly after Greenspan's testimony to Congress but later fell back, with the Dow Jones industrial average down 13 points at 10,464.