European stocks end steady, L'Oreal falls

European share indexes closed flat yesterday, dragged by a disappointing result from cosmetics maker L'Oreal while energy shares eased on a dip in US crude oil prices.

Stocks were little affected by key US payrolls data for August, which came in slightly short of Wall Street estimates but was offset by upward revisions to previous months.

L'Oreal, the world's biggest cosmetics group, shed 3.7 per cent after reporting a flat - and lower-than-expected - first-half operating profit.

Standout gainers included Julius Baer, up 8.4 per cent, and Bank Sarasin, up 2.8 per cent, on a report that Baer might buy its smaller rival.

The FTSEurofirst 300 index closed 0.1 lower at 1,183.9 points, a weekly gain of 1.7 per cent and paring last week's 2.5 per cent loss.

European stock markets have been among the best performing markets globally in 2005 on robust earnings growth, mostly led by export-oriented firms.

"Companies are still in the process of eking out good productivity improvement and maintaining good support to their bottom lines as a result," said Mike Turner, head of global strategy at Aberdeen Asset Management.

He said the impact of Hurricane Katrina in the United States was likely to slow global growth momentum and weigh on markets.

"For the year, European markets have done most of what we expect return-wise for the year."

While August's job-creation tally in the United States was slightly below the gain of 190,000 that economists had expected, the US Labour Department said job growth in June and July was stronger than previously thought, bumping up the tally for those two months by a combined 44,000.

The impact of the hurricane and weak US manufacturing data earlier this week raised expectations that the Federal Reserve might halt its year-old interest rate tightening policy.

US stocks were slightly lower, weighed down by weakness in shares of oil companies, but investors drew hope from the possibility that interest rates might not be raised as growth in the economy slows.

Around Europe, Paris's CAC-40 index was a standout loser, down 0.4 per cent, while Frankfurt's 30-share DAX eased 0.1 per cent and London's FTSE 100 closed virtually flat. Zurich's SMI lost 0.3 per cent.

Oil firms Total and BP eased as US light crude futures slipped to $68.20 a barrel.

Chemical stocks were the top performers, with British industrial gases group BOC jumping four per cent on market rumours of a bid from German chemicals giant BASF.

The DJ Stoxx auto sector was the lead faller, with Volkswagen down 0.9 per cent and Peugeot losing 1.4 per cent.

"The weakness of the dollar is having some impact on the market. The weakest sector is the auto sector - that is an area of the market that has displayed a high degree of sensitivity to currency movements," said Ian Scott, a strategist at Lehman Brothers.