European shares pared early gains by the close of trading yesterday, but ended higher on upbeat results from foods group Nestlé, while Nokia disappointed and topped blue-chip fallers.

Nokia's shares fell 4.7 per cent as third-quarter results showed demand growth came at the expense of profit margins.

By 1545 GMT, the pan-European FTSEurofirst 300 index was 0.3 per cent higher at a provisional close of 1,176.3 points, but below the day's high of 1,188.7 points.

In a busy day for results, the index recovered some of the previous day's 1.7 per cent fall when inflation fears hit markets.

"The big results have not been too bad, but the market still seems to lack confidence," said one trader.

The pan-European index is still up 13 per cent so far this year, and fund managers remained positive on equities.

"On balance, we believe companies will continue to grow their earnings while buoyant liquidity and improving business confidence will encourage investors to seek assets with potentially higher returns," said Andrew Milligan, head of global strategy at Standard Life Investments.

US stocks dipped by the close of European trading hours.

Nokia reported quarterly results in line with analysts' forecasts but showed a fall in average selling prices.

"It does again reinforce the concern that Nokia does very well at the end of the market, but is still rather struggling in the more highly priced segments," said Mark Davies-Jones, an analyst at JP Morgan.

Other analysts said a lack of a specific earnings guidance for the fourth quarter had hurt Nokia's shares.

"I would say the outlook for the fourth quarter remains pretty strong, but the fact that they haven't actually confirmed that with a hard number is making the stock a bit jumpy," said Richard Windsor, analyst at Nomura International.