European stocks ended steady yesterday as a rally in the dollar offset higher oil prices, but UK supermarket giant Tesco fell as strong Christmas sales failed to ignite more buying in the high-flying stock.
US light crude surged to a seven-week peak above $49 a barrel as cold weather in the US Northeast stoked demand for winter fuel. Oil prices dipped late in the session.
The oil and gas sector out-performed, with Norway's Statoil up one per cent and France's Total up 0.6 per cent, while British exploration company Cairn Energy jumped 4.3 per cent.
By 1632 GMT, the FTSEurofirst 300 index of pan-European blue chips was unofficially closed unchanged at 1,052.5 points but stocks to fall still outnumbered those that rose by nearly two to one.
The narrower DJ Euro Stoxx 50 index was also unchanged at 2,963.7 points.
A Reuters poll of economists released yesterday showed people were nudging down their expectations for global growth this year, while a survey of fund managers by Merrill Lynch found investors were turning less positive on equities amid concerns about the pace and scope of US interest rate rises.
"We're calling for slightly lower than consensus gains in global markets this year, specifically 0-5 per cent capital gain," said Ian McLennan, global equity strategist at UBS.
While the global economy was growing near long-term trend, the profit cycle looked to be near its peak, he said.
"Although economic growth may be above consensus expectations, earnings growth is likely to be below analysts' expectations."
UBS has an "overweight" position in European equities, based partly on more attractive valuations and the potential for companies to continue to maintain or increase profit margins by keeping a lid on wage pressures, Mr McLennan added.
A rise in the dollar to a two-month high against the euro helped European exporters erase earlier losses, with the auto sector closing up 0.4 per cent.
A firmer dollar boosts the returns of European companies with a large proportion of US sales and makes European products more competitive versus their US rivals.
In New York, stocks reversed opening declines to trade higher by mid-session. The blue-chip Dow Jones industrial average was 0.3 per cent firmer at 10,591.9 points, while the Nasdaq Composite Index rose 0.4 per cent to 2,095.9 points.
Around Europe, London's FTSE 100 closed 0.5 per cent lower, while Paris's CAC-40 ended down 0.2 per cent. In Zurich, the SMI shed 0.4 per cent and Frankfurt's DAX closed 0.1 per cent lower.