European shares closed mixed yesterday as Belgian brewer InBev, miners and utilities weighed, while oil above $52 a barrel and higher bond yields added to a bearish brew.
Telecoms equipment maker Ericsson and Credit Suisse were bright spots. Ericsson rose after Moody's raised its debt rating on the group, and CS got a boost when Merrill Lynch raised its share price target on the stock.
The FTSEurofirst 300 index ended unofficially off 0.06 per cent at 1,099.64 points, leaving it just 0.4 per cent below last month's 32-month peak. The DJ Euro Stoxx 50 index edged up 0.05 per cent to 3,080.13 points.
Shares in InBev fell 5.2 per cent after the world's biggest brewer by volume told analysts it expected lower earnings per share this year after unveiling a surge in profit for last year, when the maker of Stella Artois and Beck's beers acquired Brazil's AmBev.
Market indexes in London and Madrid fell, while those in Amsterdam, Zurich and Frankfurt gained.
Analysts said that with much of the results season over, investors want to stay in equities due to the inflow of dividends and share buybacks, but the bond market was clouding sentiment.
"Investors are very nervous of the fact the bond market is selling off again, and if it does run away, then there is a risk of contagion for other markets," said Mark Tinker of Execution stockbrokers.
"If you want to play a trend and hedge the fact that the bond market could run away with itself, then you buy crude oil, and also the first culling in your portfolio are the ones that are stretched, like utilities, especially if bond yields are going up," Mr Tinker said.
Federal Reserve Chairman Alan Greenspan sounded mostly neutral on his view of US economic prospects. Tomorrow's US non-farm payrolls figures for last month will be keenly awaited for a steer on the economy.
"However, there is nothing (Mr) Greenspan says today (yesterday) or the non-farm payrolls on Friday (tomorrow) that will change the trend in US interest rates, which is up," Mr Tinker said.
Miners were also seen ripe for selling after a strong run up on the back of rocketing metals prices and recent high prices for the iron ore they produce.
Mining groups Anglo-American, Xstrata, Rio Tinto and BHP Billiton all fell sharply as base metals prices extended their losses from Tuesday into yesterday. On Monday, bellwether copper rose to just $10, short of equalling an all-time high of January 1989. (Reuters)
Utilities were also a sore spot as their traditional status as a high-yielding sector came under fresh pressure as government bond yields rose to near three-month highs to offer a more attractive alternative for investors.
Shares in top utilities such as Suez, RWE and Red Electrica were all down.
The oil sector was one of the few industry groups higher, lifted as crude oil prices in the United States rose above $52 a barrel to increase costs for many companies and consumers.
Oil companies Royal Dutch/Shell, Total, ENI and BP all registered modest gains.
Among the day's other standouts, Dutch publisher Wolters Kluwer skidded three per cent after it reported an 11 per cent decline in last year's ordinary net profit, slightly ahead of forecasts, but disappointed investors with its guidance for this year.
As European bourses shut, in New York the Dow Jones industrial average was up 0.5 per cent at 10,862 points, while the Nasdaq Composite gained 0.5 per cent to 2,082 points.