European share indexes closed steady in thin trade yesterday as persistently high crude prices lifted oil companies, offsetting some weakness in the telecom sector following the sale of a large stake in Deutsche Telekom.
Deutsche Telekom closed down 1.3 per cent at €15.03 after the German government sold a 6.3 per cent stake in the telecoms operator for up to €4.5 billion. By 1532 GMT, the FTSEurofirst 300 index of pan-European blue chips was unofficially closed unchanged at 1,009.6 points.
Volumes were light at €1.9 billion, while stocks to fall outnumbered those to rise by about five to three.
The narrower DJ Euro Stoxx 50 index fell 0.1 per cent to 2,814.1 points.
The benchmark FTSEurofirst has rebounded nearly eight per cent since hitting a 2004 low in mid-August, with analysts now eager to see if corporate earnings and growth expectations can justify further gains.
"Most interesting will be the outlook for 2005 because there is a fear that earnings for many sectors are not going to grow as fast as they have been," said Juergen Lukasser, a fund manger for Constantia Privatbank in Vienna.
The reporting season kicks off today with results from tech heavyweight Philips, followed by mobile phone giant Nokia on Thursday.
Philips ended 1.2 per cent weaker yesterday on news that its Korean liquid crystal displays joint venture, LG.Philips LCD, reported lower quarterly profits due to a glut of flat screens on global markets pushing down prices.
Investors want to hear that companies are going to continue to grow profits at a double-digit percentage rate next year but that might prove difficult for some sectors with oil holding above $53 a barrel, Mr Lukasser said.
US light crude futures continued to hit new peaks, touching a record $53.67 a barrel early in the session to give a 65 per cent rise in prices this year as worries persisted over supplies from OPEC member Nigeria and the near month-long loss of a quarter of US Gulf of Mexico production, traders said.
Heavyweight oil companies like Shell and Total firmed but the threat of high energy prices denting consumer spending, economic growth and corporate margins pressured other sectors.
Credit Suisse First Boston said it was trimming its euro zone growth forecasts due to the persistently high oil price. CSFB cut its 2004 forecast to two per cent from 2.3 per cent and its 2005 growth forecast to 2.3 per cent from 2.5 per cent.
In New York, the blue-chip Dow Jones industrial average index was 0.3 per cent firmer at 10,081.9 points, while the Nasdaq Composite Index rose 0.1 per cent to 1,922.5 points.
Around Europe, London's FTSE 100 and Paris's CAC-40 both ended down about 0.3 per cent, while Zurich's SMI fell 0.5 per cent and Frankfurt's DAX closed 0.1 per cent higher.