European shares ended flat yesterday, off earlier session highs as concern over future economic and monetary conditions offset gains in blue chips L'Oreal and Reed Elsevier on solid earnings.
Slow sales growth at home-improvement retailer Kingfisher, a rating downgrade by Morgan Stanley on France Telecom and earnings concerns at telecoms firm Tele2 also led to declines.
The FTSEurofirst 300 index of pan-European blue chips ended up 0.1 per cent at 1,097.8 points. The index reached its highest since June 2002 earlier this week.
Shares trimmed gains earlier yesterday after the Conference Board, a private business group, said its index of leading indicators of future US economic growth had fallen 0.3 per cent in January after two months of gains.
An unexpected drop in US weekly jobless claims also failed to soothe worries about the economy as some analysts noted that these numbers were not matched by an increase in net hiring.
Repeated comments from Federal Reserve Chairman Alan Greenspan that US interest rates remained "fairly low" also fanned worries that sharp monetary tightening could smother economic growth.
"Markets seem to have taken the hint that Greenspan remains completely committed to the notion of taking US rates higher to quell any risk of higher inflation," said David Brown, an economist at Bear Stearns.
"The Fed's tightening plans are not going to be half-hearted; there will be no compromising the Fed's inflation credentials, and the Fed looks ready to stay on a constant escalator of hiking rates at every FOMC meeting this year until inflation risks are held at bay," Brown added.
Around Europe, London's FTSE 100 index was 0.1 per cent firmer, while Paris's CAC 40 edged 0.1 per cent lower and Frankfurt's DAX was little changed. The Swiss Market Index rose 0.2 per cent in Zurich.
In New York, the Dow Jones industrial average was down 0.3 per cent at 10,799.2 by 1715 GMT, and the Nasdaq Composite Index was down 0.5 per cent at 2,076.6.
L'Oreal, the maker of Fructis, Garnier, Maybelline, Lancome and Biotherm beauty products, reported a 10.3 per cent rise in annual profit, helped by the fast-growing Latin American and Asian markets. The update pushed its shares 2.3 per cent higher.
Meanwhile, Reed Elsevier added 7.5 per cent in London after the Anglo-Dutch publisher posted a modest increase in profits and said it saw long-awaited pick-ups in business-to-business advertising and science journals.