European shares closed mixed yesterday after contrasting US homes sales data, with indexes peeling back from five-year highs hit earlier in the session on upbeat earnings.
France Telecom and oil giant Royal Dutch Shell both gained after forecast-beating profits but AstraZeneca and GlaxoSmithKline fell after bad news on clinical drug trials overshadowed strong figures. Europe's FTSEurofirst 300 index closed 0.13 per cent lower at 1,452.8 points having earlier reached 1,462.32, its highest since June 2001.
Germany's DAX added 0.3 per cent and France's CAC 40 rose 0.2 per cent but the UK's FTSE 100 lost 0.5 per cent after the falls in AstraZeneca and Glaxo.
AstraZeneca shed 7.6 per cent after its stroke medicine NXY-059 was scrapped from development, weakening an already depleted new drug pipeline.
Glaxo, whose shares lost four per cent, delayed US regulatory filing of its biggest new product hope, the cervical cancer vaccine Cervarix, putting it further behind Merck & Co. Inc.'s already marketed rival Gardasil.
"Unfortunately, when all is said and done, GSK has disappointed on the fundamentals and the future of the business. Delays and difficulties in relation to new developmental drugs is not what investors wanted to hear," said Keith Bowman, analyst at Hargreaves Lansdown Stockbrokers.
European indexes followed the Dow Jones industrial average lower after September US new homes sales figures were stronger-than-expected, but August sales were revised lower.
The data painted an uncertain picture of the outlook for US growth and interest rates.
European investors had already digested the Federal Reserve's prediction for moderate economic growth ahead, combined with signs of easing price pressures. As expected, the US central bank kept interest rates at 5.25 per cent on Wednesday.
Telecoms gained, with France Telecom up 3.6 per cent after its fightback from previous woes continued with forecast-beating third-quarter profit. Norway's Telenor soared seven per cent after it topped estimates and said it would sell its satellite services unit.
Royal Dutch Shell added two per cent after its third-quarter underlying profit beat forecasts thanks to high oil prices. The results raised investor hopes that the Anglo-Dutch group has turned the corner after two tough years.
Upbeat corporate earnings across recent quarters, which in turn have spurred a raft of takeover deals, have been the major factor in propelling European shares back to five-year highs after a sharp correction in May and June.
Merger news continued to bubble away, with ThyssenKrupp up 2.7 per cent on speculation US steelmaker Nucor may bid, while aero engines and telecoms Safran jumped after a Motorola executive told Le Figaro it was interested in its Sagem mobile phone and fax unit.
On the downside, shares in German tyre and car parts manufacturer Continental AG fell almost four per cent, despite the firm reaffirming its 2006 targets following market speculation of a possible profit warning.