European shares yesterday ended little changed as investors cheered solid numbers by BP and agrochemical giant Syngenta but remained uncertain about the timing of expected rises in US interest rates.
Carrefour added to corporate optimism as the world's second largest retailer reiterated its full-year outlook for six per cent sales growth, while Belgian brewer Interbrew reported strong 11 per cent internal growth in first-quarter output.
The FTSE Eurotop 300 index of pan-European blue chips edged 0.01 per cent lower to 1,026 points, unable to break above Monday's 22-month peak of 1,030.9. The narrower DJ Euro Stoxx 50 index inched up 0.01 per cent to 2,886.4.
Trade was subdued at barely €2.4 billion as uncertainties over exactly when a US interest rate hike would take place kept investors unsure about their strategies for equity portfolios.
"People are confused, and what's confusing them is what the implications of higher US interest rates mean for stock picking," said Nomura strategist Anais Faraj.
Prospects of higher borrowing costs traditionally push investors to switch out of highly cyclical stocks, which are more exposed if economic recovery slows due to rate increases, into more stable blue chips.
"The prospect of higher interest rates is more than discounted by markets, but people are now scared to give up on high-beta stocks, which have done extremely well in the last 12 months, just because they've been told rate rises are coming and they should move to pharmaceuticals or into insurers."
Mr Faraj said markets needed confirmation through strong economic data that US interest rates will indeed be raised, maybe as soon as this summer.
"What people want to see is another strong 300,000-plus payrolls number before they think it is a normal recovery. Next week's numbers will be critical to trigger this portfolio rotation."
Yesterday's report by the Conference Board, a private research firm, showing a surprise jump in its US consumer confidence index to 92.9 in April from a revised 88.5 in March added to a recent series of better-than-expected indicators.
Investors looked ahead to the first-quarter gross domestic product tomorrow and next Friday's key payrolls.
Around Europe, the FTSE 100 ended 0.09 per cent higher and the DAX added 0.2 per cent, but the CAC 40 eased 0.09 per cent and the Swiss blue chip index shed 0.2 per cent.
On Wall Street, the Dow Jones industrial average was up 0.5 per cent at 10,498, while the technology-focused Nasdaq Composite Index was up 0.1 per cent, at 2,039 by 1540 GMT.
Switzerland's Syngenta led blue chip gainers, adding 4.3 per cent after it reported a forecast-beating 15 per cent rise in first-quarter sales and also raised its 2004 outlook. Larger rival Bayer rallied 1.4 per cent.
BP revealed profits towards the top end of forecasts, but its shares firmed only 0.7 per cent as analysts said they were cautious about rising costs facing BP and its industry rivals.
Credit Suisse added 2.5 per cent as it unveiled a huge but largely expected drop in 2003 profits as it restated past earnings in a switch from Swiss to US accounting rules.
One dealer added that worries about the restatement would now disperse and that forecasts remained intact.
Alstom was another strong gainer, rebounding 6.5 per cent from a recent slide after creditors agreed to let the troubled French engineering firm break covenants linked to its earnings. Traders speculated the deal may have been reached because of possible new orders in Alstom's pipeline.
But Amvescap slipped 4.3 per cent after the Anglo-US fund manager posted a below-forecast rise in first-quarter profit and said it may not meet its 30 per cent target for 2004 operating profit margins.
Elsewhere, Linde fell 2.7 per cent in reaction to news that the German industrial gases and engineering group was launching a convertible bond. Late on Monday, Linde announced a €550 million, five-year bond convertible into up to eight per cent of its share capital to fund the buyback of an old bond.