European shares ended a subdued session slightly weaker yesterday, breaking a four-day winning run as transport stocks and airlines including Air France fell after oil climbed to near $50 a barrel.
Technology stocks also weighed as some investors in bellwether stocks such as mobile phone company Nokia and semiconductor equipment maker ASML sold following the week's rally. Nokia fell by 1.3 per cent and ASML by 2.9 per cent.
Energy stocks outperformed on the back of crude gains. The FTSE Eurotop 300 index of pan-European blue chips closed 0.2 per cent weaker at 951.3 points on skimpy turnover of around €1.5 billion.
After hitting a new 2004 intra-day low on Monday, the Eurotop 300 finished the week one per cent higher, its second weekly gain since mid-June.
The narrower DJ Euro Stoxx 50 index fell 0.2 per cent to 2,625 points.
"At the moment we've got this big macro concern, which is for how long will this economic recovery continue at this pace?" said Stewart Higgins, a European fund manager at Martin Currie in Edinburgh.
"It's been a nervous market, where any (earnings) disappointment has been greeted with sharp falls in the share price, and good results have been greeted with a muted response," he added.
"The market has moved to difficult-to-please mode. It's a bit like buying a Christmas present for your mother-in-law - you're never going to get it quite right."
But despite the overall market malaise, opportunities for stock-picking were still available.
"From a bottom-up basis, we're finding a lot of stocks we are very happy with, (and) we're comfortable with valuations, so I would say there is some room for optimism," Higgins said.
Oil prices continued to march higher, with US light crude futures climbing to a peak of $49.40 a barrel, for a gain of more than 12 per cent in the past three weeks alone.
"Looking at the past impact of oil on the market, it looks as if (an inflation-adjusted price) of about $34 a barrel is a turning point," said Andrew Barker, European strategist at UBS.
"Up until then, oil price rises get taken positively as they are an indication of growth in the economy, but above that they seem to have a negative impact on the market. Obviously we are well into negative territory."
Air and transport stocks - big users of oil - suffered. Air France closed 2.5 per cent lower at €12.30, while rival Lufthansa shed 1.8 per cent to €9.15.
In New York, the blue-chip Dow Jones industrial average was 0.2 per cent firmer at 10,062.8 points, while the Nasdaq Composite Index rose 0.4 per cent to 1,827.5 points by 1617 GMT.
Around Europe, London's FTSE 100 closed 0.2 per cent higher, while Paris's CAC-40 ended down 0.2 per cent. In Zurich, the SMI fell 0.1 per cent and Frankfurt's DAX closed 0.3 per cent lower.
French advertising group Publicis rallied 0.2 per cent to €21.79 on news it will replace drugmaker Aventis in France's CAC-40 index of blue-chips.
Lens maker Essilor, which had been touted as a potential CAC-40 entrant above Publicis, fell 3.8 per cent.
Inclusion in the index is positive for stocks because fund managers often link their portfolios to such benchmark indexes, and some buy only CAC-40 stocks.
Publicis outperformed rival ad agency WPP Group, which fell 1.3 per cent to 488 pence in London. The world's second-largest advertising company posted a 16 per cent rise in first-half profits, but uncertainty over a possible bid for US-based Grey Global and cautious comments about the US economy weighed, dealers said.
Elsewhere, Belgian image technology firm Agfa Gevaert rose 4.1 per cent to €22.51 after UBS said the company could become a potential takeover target after the planned sale of its troubled photographic film unit.
Hopes of a major oil field equipment contract at the giant Kashagan oil field in Kazakhstan boosted Italy's Saipem to an all-time high of €8.71. The stock closed up three per cent at €8.69.