European shares clawed back earlier losses to end at a fresh five-year closing high, buoyed by technology stocks as Ericsson rallied, although lacklustre mining stocks helped cap gains.

Among major movers, Credit Agricole sank on plans to raise capital to fund its Italian bank branch purchase, while Britain's Carphone Warehouse leapt after agreeing to buy Time Warner's AOL Internet business in the UK.

"I'm not bearish at all. There's a bit of a short squeeze on the market from the derivatives side," said Thomas Muehlberger, fund manager at Bayern Invest in Munich. The FTSEurofirst 300 index of top European shares closed unofficially up 0.1 per cent at 1,425.3 points, notching up six consecutive sessions of gains and bringing its rise over the past six sessions to around 2.3 per cent.

Britain's FTSE 100 ended flat at 6,073.5 points. Germany's DAX closed unchanged while France's CAC 40 gained 0.1 per cent, with worries about North Korea and US monetary policy casting a shadow.

"The market will probably grind higher but it might be bumpy. It won't necessarily be an easy ride," said HSBC strategist Patrik Schowitz, who nonetheless expects high-single digit gains for stock indices in 2007.

"The US economic cycle is cooling off but this is something equity markets can live with."

Investors were also cautious ahead of the publication later on Wednesday of the minutes of the Federal Reserve's last policy-setting meeting.

Among major gainers, Ericsson jumped 4.6 per cent after its part-owned venture Sony Ericsson beat third-quarter forecasts when it released its results earlier than expected. Elsewhere in the sector, Nokia added two per cent.