European shares ended little changed yesterday after retreating from 29-month highs as the euro peaked anew against the dollar and oil stocks fell due to lingering weakness in crude prices.
Light share dealing due to year-end holidays also made it difficult to sustain any trend.
"Everybody is squaring up for the end of the year," said Mark Tinker of brokerage Execution.
"Anybody that extrapolates trends from the past two or three week period is likely to get caught out badly as we won't see a clear picture emerging until next week," Mr Tinker said.
The FTSEurofirst index of pan-European blue chips ended down 0.06 per cent or 0.63 point at 1,041.53 points after hitting its highest level since early July 2002. The DJ Euro Stoxx 50 index closed down 0.07 per cent or 1.96 points at 2,953.15.
Bourses drew comfort from Wall Street's rally to 3-1/2 year highs on Tuesday, though New York was mixed as Europe closed yesterday.
European shares are set to end 2004 up about eight per cent and Mr Tinker expects a similar, modest gain next year with key determinants being the trend in US interest rates, and the attempts to cool strong Chinese growth.
Yesterday, shares in EADS, parent of aircraft maker Airbus, eased 0.14 per cent after China said it would not approve any new commercial aircraft purchases in 2005 in a bid to curb "over-heated" growth in the sector.
The euro set a record high against the dollar for the fifth session running yesterday, making cars and other exports from the euro zone to the US less competitive. Automaker DaimlerChrysler shed 0.65 per cent.
"The dollar is still very weak against the euro despite strong figures in the US on consumer confidence, but nothing has been done about the twin deficits there," said Rene Bastiaenen of Eureffect Asset Management in Amsterdam.
"The dollar worries a lot of firms and will depress earnings. For European investors it's not good news," Mr Bastiaenen said.
Crude oil was flat at $41.80 a barrel as bourses shut, leaving the commodity down more than 5 per cent for the week to put pressure on oil groups, with Royal Dutch ending off 0.5 per cent.
Insurers steadied after Munich Re said it expected its damage claims from the Asian tsunami to be less than €100 million ($136.4 million).