European stocks flat as oils, drugs offset banks

European stocks ended flat yesterday, pausing after last week's sharp losses as rising oil prices lent support to energy shares but banking stocks were hit by worries over the health of the sector.

Pharmaceutical stocks climbed, led by Shire's gains on an upbeat broker note.

The FTSEurofirst 300 index of top European shares closed 0.03 per cent higher at 1,222.89 points. The index slipped 3.5 per cent last week on concerns over the outlook for banks, high oil prices and the spectre of interest rate hikes.

UK's FTSE 100 index added 0.8 per cent, bolstered by gains in energy stocks, as oil prices moved above $137 a barrel again. Royal Dutch Shell added 1.5 per cent and BP gained 1.8 per cent, while France's Total rose 2.1 per cent. Germany's DAX index gained 0.2 per cent, and France's CAC 40 rose 0.05 per cent.

Banks featured among the top losers yesterday, with UBS down 4.4 per cent and Credit Agricole down 4.5 per cent.

Deutsche Postbank tumbled 6.2 per cent as traders said the lender, a takeover target, may not fetch an attractive deal in the face of growing interest in rival Dresdner.