Europe shares end flat

European shares ended flat yesterday as weakness in financial stocks offset gains in mining shares boosted by rising commodity prices, and the euro hit a fresh high against the dollar.

Financial shares were the weakest sector in the FTSEurofirst 300 index with Deutsche Bank falling 1.8 per cent after sources familiar with the situation told Reuters it could take a $2.4 billion hit to its quarterly profit as a result of the credit market turmoil.

Deutsche Bank declined to comment. BNP Paribas fell 2.3 per cent, Barclays dropped 2.8 per cent and Royal Bank of Scotland fell 1.7 per cent, accounting for the top three weighted losers on the FTSEurofirst 300.

Belgian-Dutch financial group Fortis led the board of decliners in the FTSEurofirst index, falling about five per cent ahead of a capital increase today.

The FTSEurofirst index ended 0.03 per cent lower at 1,545.77 points after reaching an intra-day high at 1,550.98 and a low 1,541.79 points.

Ernst Konrad, head of equities at BayernInvest, said further negative news flow in the banking sector could be expected. "This will keep us busy in the next couple of weeks," he said.

"While banks still look good, one has to take into account that profits will be clearly lower next year compared to this year," Mr Konrad said, adding that valuations would soon need to be adjusted.

The euro rose to a record high against the dollar for a third straight session. Copper prices added more than one per cent and gold prices in Europe traded near 28-year highs.

A softer dollar tends to make dollar-priced assets more attractive to holders of foreign currencies, while gold is also generally seen as a hedge against inflation.

Mining shares such as BHP Billiton, Anglo American and Rio Tinto gained four-to-six per cent each, pushing the DJ Stoxx European basic resources index 3.3 per cent higher. Britain's FTSE 100 index ended 0.1 per cent up.

Top decliner in the UK benchmark index was Northern Rock. Shares in the embattled British bank resumed their fall, dropping 11.5 per cent amid worries it may not pay its interim dividend and a report that a hedge fund break-up could leave investors with almost nothing.

Clothes-to-food retailer Marks & Spencer rose 4.4 per cent to top the FTSE 100 leaderboard on a positive note from Deutsche Bank, a trader said.