European shares end up

European shares ended at highs not seen for several years yesterday after strong earnings from Nokia and companies on both sides of the Atlantic, but high oil prices and weak mining stocks capped market gains.

Dutch chemical group Akzo Nobel, luxury goods giant LVMH and food group Danone were among the biggest gainers in Europe after reporting forecast-topping numbers, while positive earnings news in the US, even from beleaguered General Motors, also buoyed sentiment.

The FTSEurofirst 300 index of Europe's 300 biggest companies ended 0.24 per cent higher at 1,387.36 points - its highest closing level since July 2001 - bringing gains since the start of the year to 8.8 per cent.

The index ended the day down from a session high of 1,392.85 after sharp falls in metals prices sparked a sell-off in runaway mining shares, with heavyweight Rio Tinto closing nearly four per cent lower.

Mobile phone giant Nokia took the spotlight on a busy day for earnings, with January-March profit and sales well above expectations, sending its shares nearly six per cent higher, boosting a technology sector earlier held back by software maker SAP's disappointing quarterly report. SAP ended down one per cent.

There was also a positive earnings surprise from Akzo Nobel, which rose six per cent after its quarterly earnings beat forecasts and helped boost shares in rival ICI by 2.3 per cent.

Shares in LVMH rose two per cent after the world's biggest luxury goods group posted a 15 per cent first-quarter sales gain, buoying its holding company Christian Dior and Swiss rival Richemont.

Also in France, Danone sales rose a stronger-than-expected 15 per cent in the first quarter, pushing its shares 1.3 per cent higher, while eye-glasses giant Essilor surged 5.9 per cent after posting a 21.5 per cent rise in turnover.

The earnings figures soothed investors wary about the quality of corporate profits after nearly two years of generally positive news, but concern about the impact that surging oil prices might have on consumers and corporate profitability kept sentiment on a leash.

"A sustained run (of oil) at or above these current levels means that inflationary pressures could start to weigh, whilst attempts by manufacturers to cover the subsequent output price increases means that margins will likely find themselves squeezed to the absolute limit," said Paul Webb, trader at CMC Markets in London.