Drug stocks, fortified by hopes of bigger US sales, lifted European shares yesterday to end the week flat, though still near their best levels of the year. The FTSE Eurotop 300 index ended the day up 0.5 per cent at 939.91 points, with more than two shares rising for each one falling.

The benchmark struggled to match the 2003 peak set last week as Wall Street trading was mixed, but is up 10.5 per cent for the year after its hefty rally from a six-year nadir in March.

"The market is no longer as good value as it was. Although we have a lot of headwind behind it with economic data coming up nicely, we have had several months in a row of good performance and I would not be surprised to see a pause," said Richard Champion of Pavilion Asset Management.

Among the standouts, ING Groep fell 1.4 per cent to €18.6 as the Dutch firm, Europe's number three insurer, offered cautious guidance after reporting a weaker than expected third-quarter net operating profit.

Italian bank Capitalia reported forecast-beating quarterly numbers, sending its shares higher.

Parmalat ended the week down 12 per cent on concerns about the Italian food group's balance sheet, sinking further yesterday on news its finance director had resigned.

Autos lagged as new car sales in western Europe slipped in October, and a dip in US retail sales last month was blamed on weaker demand. Europe's biggest carmaker Volkswagen said it would cut investment over the next five years, and its stock eased a touch to €44.9.

The DJ Euro Stoxx 50 index, a benchmark of euro zone blue chips, closed up 0.8 per cent at 2,656.9 points, while the FTSE 100 in London clocked up its best close since late August 2002 after hitting fresh 2003 highs.

The construction sector benefited from signs of a European and Japanese economic recovery, hitting new highs for the year.