European shares ended the week on a positive note, closing 0.3 per cent firmer yesterday as strong oil prices helped energy shares including France's Total and a rebound for Britain's Barclays boosted banks.
Insurers were a weak spot, with Swiss Re down 2.7 per cent to 71.30 Swiss francs after the world's second largest reinsurer said it might need to dip into its reserves to cover the cost of this year's storms.
Rival Munich Re said it expected losses from three powerful hurricanes that hit the United States to be about €500 million. Its shares closed down 1.1 per cent at €78.63.
The FTSE Eurotop 300 index of pan-European blue chips closed up 0.3 per cent at 992.5 points, paring declines for the week to less than 1 per cent. Turnover was a moderate €2.1 billion.
The narrower DJ Euro Stoxx 50 index rose 0.2 per cent to 2,740.1 points.
Trading at a combined price of around 12.1 times estimated 2005 earnings, European stocks are valued quite attractively, strategists said.
"Equities look cheap against other asset classes including government bonds, corporate bonds and residential real estate," Smith Barney strategists said in a note.
"We believe valuations will continue to support European markets and help offset the top-down headwinds of rising interest rates, falling lead indicators and high oil prices."
Oil prices remained firm yesterday, holding above $48 a barrel on continued concerns about tight supplies. While the prices are a concern for transport and many manufacturing companies, oil stocks benefited. Total rose 1.2 per cent, Italy's Eni added 1.1 per cent and BP was 0.9 per cent firmer.
In New York, the blue-chip Dow Jones industrial average was 0.1 per cent firmer at 10,049 points, while the Nasdaq Composite Index fell 0.2 per cent to 1,882 points by 1616 GMT.
Around Europe, London's FTSE 100 closed 0.2 per cent firmer, while Paris's CAC-40 ended up 0.6 per cent. In Zurich, the SMI fell 0.4 per cent and Frankfurt's DAX closed 0.1 per cent higher.
A month-long rally in European stocks ran out of steam this week under the pressure of a number of high-profile profit warnings, including consumer goods giant Unilever, home appliance maker Electrolux, and yesterday the chip unit of electronics giant Philips.
Investors said the warnings were a concern but they did not necessarily herald an extended decline for markets.
"Although we have had some profit warnings and (earnings) disappointments, overall company profits are looking quite good," said Matthias Grimm, a European fund manager who manages around €850 million for Cominvest AG in Frankfurt.
The world's biggest confectioner, Cadbury Schweppes, issued a glum outlook, saying its annual results would come in toward the lower end of its financial goal ranges. Cadbury shares ended 1.9 per cent lower.
Barclays led a rally in the bank sector as investors overcame early concerns about a possible acquisition in South Africa to focus on the potential boost in earnings it could provide. Barclays closed up 3.9 per cent at 540p.
British corporate telecoms firm Thus plunged 24 per cent to 13p after warning that predatory pricing in an overcrowded market would hurt its first-half profits.
Rivals Cable & Wireless and Colt Telecom Group fell two per cent and six per cent, respectively.
German retailer KarstadtQuelle closed up 5.2 per cent after saying it wanted to sell at last three-quarters of its mortgage banking unit, the first concrete detail of what is expected to be a wide-ranging overhaul.
Philips closed down just 0.1 per cent after it cut the sales forecast for its chip unit and predicted smaller growth for the semiconductor industry next year.
Dealers said the warning had been expected after similar comments from global peers and noted that the stock had been slipping earlier this week ahead of the announcement.