European stock markets closed mixed yesterday in thin volumes due to the holiday season, but DaimlerChrysler rallied 1.3 per cent as it sold its heavy diesel motor unit.
Oil shares Total and BP ended lower due to easing oil prices, but pared some of their earlier losses.
"Oil stocks are still not discounting as strong a backdrop for the oil price as we anticipate, so we still think there is some value in terms of the oil price," said Paul Niven, head of strategy at F&C Asset Management.
By 1630 GMT, the pan-European FTSEurofirst index of 300 leading shares was 0.15 per cent weaker at an unofficial close of 1,277.7 points, a day after ending at its highest level in nearly 4-1/2 years.
US stocks were slightly higher after a report showed a rise in consumer confidence this month.
Fund managers said European equity markets were supported by stronger-than-expected earnings growth this year.
"The market has kept pace with earnings growth, so the market hasn't been particularly re-rated," said James Buckley, a pan-European fund manager at Baring Asset Management.
Volumes were thin, with only about 1.1 billion shares traded compared with average volumes of about 2.5 billion shares. "In terms of price to earning multiples, or equities earnings yields, relative to bonds, or dividend yields, or free cash flow measures, the market still doesn't look expensive despite its recent performance," said Mr Buckley.
"That's what gives people confidence for next year." The pan-European index is up nearly 23 per cent this year and is on course for its best annual performance since 1999.
Mr Buckley said he favoured banking stocks. "Certain banks look quite cheap and have relatively undemanding valuations, strong balance sheets and good earnings and dividend growth. So, that will be one area we'll be investing significantly in."
London's FTSE 100 index outperformed with a 0.5 per cent rally, driven by gains in pharmaceutical stocks.
AstraZeneca rose 1.3 per cent after Europe's third-largest drugs maker signed a $300 million research and licensing agreement with Targacept Inc., its fourth deal this month as it seeks to broaden its depleted pipeline of new drugs.
Around Europe, Paris's CAC-40 lost 0.3 per cent, Frankfurt's DAX closed flat and Zurich's SMI rose 0.14 per cent.
Miners BHP Billiton and Anglo American edged higher as gold prices and copper prices rose.