European stocks end up despite data as techs buoy

European shares closed near 40-month highs yesterday as rising semiconductor makers such as Infineon and STMicroelectronics buoyed and as Wall Street seemed to weather gloomy economic data.

The FTSEurofirst 300 index of pan-European blue chips trimmed its gains after data showed US consumer sentiment had worsened even more than expected in September and that inflation had climbed in the world's biggest economy.

But a retreating oil price - albeit still well above $65 a barrel after hurricanes and strikes closed or slowed output - supported equity markets as worries eased over the fallout of high energy costs on spending and corporate profits.

The FTSEurofirst 300 index of pan-European blue chips gained 0.2 per cent to 1,227.2 after earlier rising to 1,231.15. Britain's FTSE 100 was steady around 5,4777, Germany's DAX added 0.46 per cent to 5,044.12 and France's CAC 40 was up 0.46 per cent to 4,600.

"The fact that we're approaching the end of the quarter is being seen as a key driver here, although a generally buoyant mood amongst equities in Japan and much of Europe appears to be providing some support here too," says Matt Buckland, a trader at spread-betting firm CMC Markets.

The European technology sector saw the biggest gains after the head of the chip business at Dutch group Philips said growth in the world semiconductor industry was expected to hold steady next year at five to six per cent.

Philips finished up 0.5 per cent and STM gained 3.3 per cent. Infineon rose 2.5 per cent and was also boosted by an upgrade from broker Smith Barney to "buy".

Other tech-related stocks were carried higher too, with Nokia the top blue-chip gainer after adding 2.6 per cent and Siemens gaining 0.8 per cent.

Shares in Dutch publishing group VNU gained more than four per cent to be among the top European gainers on talk that the group might abandon its plan to acquire IMS Health.

Retreating oil prices bumped shares in producers with the overall European oil and gas sector finishing the day around 0.7 per cent weaker. BP closed 1.5 per cent lower, Nestle Oil lost 2.1 per cent and ENI fell one per cent.

Elsewhere, Carrefour rose 1.3 per cent after the French group agreed with Britain's Tesco a store swap deal that would see both retailers exit countries in which they have low market shares to boost positions of strength elsewhere.

"This deal would allow Carrefour to continue the rationalization of its portfolio, after exiting Japan and Mexico, and focus on countries where its competitive potential and positioning are better," CM-CIC Securities analyst Emmanuelle Thollon Pommerol said.