European shares edged up to a three-week closing high yesterday with telecom shares leading the advance after soothing earnings results and airlines gaining ground on merger news.
But gains were limited by weaker financial stocks and a decline in energy and mining shares following a drop of 0.8 to 3.9 per cent in prices of crude oil, copper, aluminium, nickel and zinc.
The FTSEurofirst 300 index of top European shares ended up 0.1 per cent at 1,014.91 points, the highest close since October 21. The index is up 22 per cent in 2009 and has surged 57 per cent since hitting a record low in March.
Telecom shares were among the top gainers after Britain's BT Group increased its outlook for the full year and Telefonica said its recession-hit Spanish business was shrinking more slowly.
BT Group rose 3.7 per cent and Telefonica was 1.1 per cent higher. TeliaSonera climbed 6.2 per cent after the Nordic region's biggest telecom operator and Alfa Group said they would combine their Eurasian mobile assets.
"I am fundamentally sceptical, but the market still has a short-term underlying positive bias," said Giuseppe-Guido Amato, strategist at Lang & Schwarz.
"We can get a setback here, but we have seen that we can recover very quickly after having a losing streak and that's a good sign," Mr Amato added.
The market got some support from data showing the number of US workers filing new claims for jobless insurance fell for the second week in a row and the four-week moving average of claims was the lowest in nearly a year, pointing to improvements in the labour market.
British Airways and Spain's Iberia jumped 7.5 per cent and 11.8 per cent respectively as a merger between the two companies looked imminent as their boards held separate meetings to discuss a deal to create the world's third-largest airline by revenue.
"We think the upwards trend for equity markets is fully on track. Earnings season is almost over and it was mostly positive. Macro data will now gain in importance," said Tammo Greetfeld, strategist at Unicredit Group.
But a sharp decline in commodity prices limited the market's advance. Crude oil prices slipped more than $2 to around $77 a barrel on a jump in US crude stocks and a stronger dollar.
BP, Royal Dutch Shell, BG Group, Tullow Oil, Total and StatoilHydro declined 0.5 to 1.8 per cent.
Miners also fell, with BHP Billiton, Antofagasta, Rio Tinto and Eurasian Natural Resources falling 0.6 to 1.7 per cent.
A.P. Moller-Maersk fell 5.3 per cent after the Danish shipping and oil group reported a deeper-than-forecast net loss for the first nine months of the year, hit by a global slump in freight.
But Anheuser-Busch InBev, the world's top brewer, was up 1.5 per cent. Its quarterly core earnings grew by slightly more than expected on the back of cost cuts and higher prices.