Forecast-beating numbers from drugs giant AstraZeneca and software maker SAP helped European shares end yesterday in the black, but UK banks capped overall gains amid fears of further interest rate hikes.
Miners were another strong spot, rebounding after BHP Billiton, the world's largest miner, said its Australian iron-ore output had hit a quarterly record on China-led demand.
British grocer William Morrison, meanwhile, rallied nearly 15 per cent as investors cheered signs it can successfully turn around sales at its newly acquired Safeway stores.
The FTSEuro First 300 index of pan European blue chips gained 0.5 per cent to end unofficially at 997.3 points, while the narrower DJ Euro Stoxx 50 index was up 0.6 per cent at 2,785.6 points.
The benchmark FTSEuro First index remained stuck roughly at the mid point of a two-month trading range between 980 and 1,020 points as investors tried to assess the impact of surging energy costs on consumption and company profits.
"Markets don't know whether US economic growth can be sustained in the face of disappointing employment data, higher oil prices that erode corporate margins and personal income, and a widening trade balance deficit," said Valerie Plagnol, economist at French broker CIC Securities.
A report on factory activity in the US Mid-Atlantic region, published after European markets had closed, was unlikely to soothe investors. Though the headline number came in strong, employment and the new orders component, a pointer to future growth, both slipped.
Around Europe, Paris's CAC-40 and Frankfurt's DAX rose 0.6 per cent each, and Zurich's SMI gained 0.5 per cent, but London's FTSE 100 ended only 0.02 per cent firmer, capped by heavily weighted banking stocks.
Shares in Barclays, HBOS, Lloyds and Royal Bank of Scotland fell following data that showed British retail sales had surged in September at the fastest pace in eight months.
The unexpectedly strong numbers cast doubt on the view that the economy was slowing, raising the spectre of further monetary tightening, even though some economists such as James Carrick at ABN AMRO pointed out that sales were bolstered by aggressive discounting by retailers rather than higher purchasing power.
The technology sector was a gainer, with SAP shares up 2.6 per cent after Europe's largest software maker pleased investors with forecast-beating licence sales and a higher market share.
Telecom equipment maker Alcatel was another bright spot, up eight per cent after news it won a $1.7 billion contract from US telecoms firm SBC Communications.
AstraZeneca led pharmaceutical gains, adding two per cent as a 17-per cent rise in its third-quarter earnings per share provided a slice of good news, following the US rejection of its big new drug hope Exanta.
Novartis rose 0.7 per cent after the Swiss healthcare group beat expectations with a 21 per cent rise in third-quarter net profit and confirmed the prospect of a record full year.
Elsewhere, food group Nestle, which has been stung by the rising cost of raw materials, was up 1.3 per cent after powerful growth in the Americas helped it sustain nine-month underlying sales.
In New York, the blue-chip Dow Jones industrial average was off 0.5 per cent by 1630 GMT, but the tech-rich Nasdaq Composite Index rose 0.2 per cent.