European shares close flat

European stocks closed flat yesterday after fresh economic worries offset takeover news and strength in resource stocks.

Swedish truckmaker Scania jumped another six per cent after rejecting an offer from Germany's MAN, while other Swedish stocks rallied after the centre-right ended 12 years of Social Democrat rule in Sunday's election.

The pan-European FTSEurofirst 300 index closed 0.05 per cent up at 1,374.02 points and the narrower DJ Stoxx 50 index was also flat at 3,504.2.

Investors were nervous before tomorros's US Federal Reserve Open Markets Committee (FOMC) meeting. Hawkish comments from European Central Bank policymakers at International Monetary Fund meetings in Singapore also hurt.

Euro-zone monetary officials said that the European Central Bank expects to continue raising interest rates in 2007, possibly above four per cent, if its scenario for trend growth unfolds and inflation risks worsen.

"There are lots of niggles in the back of traders' minds right now - political uncertainties, interest rates, housing slowdown in the US, oil prices. The picture as a whole needs to be clearer before any sustained rally in stocks is seen," said Martin Slaney at GFT Global Markets.

Shares in Finnish mobile handset maker Nokia also weighed, falling over one per cent after key supplier Perlos cut its third-quarter and full-year outlook.

Perlos shares plunged 17 per cent. Last week Elcoteq, another Nokia supplier, warned on profits.

Among domestic bourses, Germany's DAX fell 0.2 per cent and France's CAC 40 was little changed as Wall Street started its session flat.

Britain's FTSE 100 gained 0.2 per cent however with heavyweight oil and mining shares gaining after commodity prices recovered. Miner Anglo American added over three per cent while BP put on nearly one per cent.

Sweden's OMXS 30 index also rose 0.65 per cent after a centre-right alliance, which plans tax cuts and privatisations, started work on forming a coalition government.

The election result put the focus on shares with government holdings. TeliaSonera rose 1 per cent while Nordea and SAS added around two per cent.