European shares closed higher for a second day yesterday, helped by solid gains from technology companies such as software maker SAP, though volatile oil prices kept buying sentiment in check.
Heavyweight drugmaker AstraZeneca also bit off some of the market's gains as US experts started a day-long review of its new anticoagulant pill Exanta, regarded as key to the company's future growth. Its shares were 2.4 per cent lower.
Documents released on Thursday questioned Exanta's effectiveness in preventing strokes and raised concerns about side effects, prompting industry analysts to say that the drug may not win approval.
The FTSE Eurotop 300 index of pan-European blue chips ended 0.37 per cent firmer at 988.3 points. The narrower DJ Euro Stoxx 50 index rose 0.55 per cent to 2,745.9.
Volumes amounted to a thin €2.5 billion, which strategists said reflected investors' reluctance to open new positions due to doubts over the direction of volatile oil prices and the sustainability of global economic growth.
"The fundamentals in Europe are solid and so are valuations, but there's a high degree of risk aversion out there, and fund manager cash holdings remain high," said Patrik Schowitz, a global strategist at HSBC.
"One trigger (for a potential breakout to the upside) is if oil prices recede so people can focus on the fundamentals again."
Uncertainties in the run-up to the US elections and worries over China's drive to tame its red-hot economy also contributed to keep the benchmark Eurotop index four per cent below a 21-month peak of 1,030.86 points hit at the end of April.
Crude prices spiked up again yesterday after leaping almost $2 a barrel the previous day on news US crude inventories had sunk to a five-month low last week and distillate fuels supplies barely grew ahead of winter.
But news of a surprise 0.1-per cent drop in US producer prices last month helped quell fears that high oil prices had fostered inflationary pressures, which could cap household consumption and squeeze corporate profit margins.
"The number is a little surprising after yesterday's data showed higher oil prices pushed import prices 1.7 per cent higher that same month (last month)," said economist Olivier Gasnier at SG Securities. "Maybe we'll see a slight PPI correction next month.
"But this nonetheless remains relatively good news for economic growth," he added.
Shares in big oil companies, whose earnings potential improves in tandem with the rise in crude prices, gained yesterday. Total added one per cent, while BP rose 0.6 per cent.
In New York, the Dow Jones industrial average was down 0.3 per cent to 10,257 - weighed by a profit warning from aluminium maker Alcoa - but the tech-laced Nasdaq Composite Index gained 0.5 per cent to 1,879.7.
News that US software maker Oracle had received the green light to take over rival PeopleSoft cheered technology investors worldwide.
Analysts said the deal, if it went ahead, could trigger more mergers in the global business software market, in which companies such as German software group SAP operate.
Shares in SAP gained 4.3 per cent, while French-American software maker Business Objects, which is regularly cited as a possible takeover target, rallied 7.2 per cent.
Above-consensus results from US chipmaker National Semiconductor added to bullish sentiment in the industry, a day after Finnish telecoms equipment giant Nokia pleased markets by raising its guidance.
Shares in Franco-Italian chipmaker STMicroelectronics rose four per cent, while Germany's Infineon added 5.1 per cent and Philips gained 1.6 per cent.
Elsewhere, British supermarkets chain J Sainsbury was also firmer, up 2.2 per cent on renewed takeover rumours, although a source familiar with the situation told Reuters Sainsbury was not in talks regarding a takeover.
Capitalia rose 5.8 per cent after the Italian bank posted operating income at the top end of analysts' estimates, while French advertising major Publicis gained 2.78 per cent after giving bullish operating margin forecasts.
British caterer Compass extended Thursday's 25-per cent slide, losing another 3.7 per cent as investors reeled from the company's profit warning the previous day. Talk of a 15-million share placing in the stock added to the drop.