European shares ended little changed yesterday as hopes for a cancer pill lifted drugmakers Novartis and Schering, but oil prices at new record highs and weak insurers restrained the advance.
Swiss Re shed 3.2 per cent despite reporting a forecast-topping 2004 net profit, as large investment gains were seen to be masking weak spots in the reinsurer's underlying business, while a bigger-than-expected quarterly loss pushed Allianz, Germany's biggest insurer, down 1.5 per cent.
A warning by Morrison Supermarkets that its year profit would miss market forecasts pressured the retail sector, while spirits group Pernod Ricard fell two per cent as a strong euro drained underlying profit growth at its top brands.
The FTSEurofirst 300 index of pan-European blue chips inched up 0.1 per cent to 1,079.6 points while the narrower DJ Euro Stoxx 50 index rose 0.3 per cent to 3,039.8.
The indexes suffered their biggest one-day points decline in seven months on Wednesday amid concerns that global monetary policy may have to tighten faster than previously thought to contain costs.
With concerns over inflation and interest rates top of the agenda, markets were now looking ahead to next week's US consumer price data and the meeting of the US Federal Reserve's rate-setting committee.
In the meantime, investors digested a report showing activity at Mid-Atlantic factories, a key gauge of US manufacturing, had slowed in March. The Philadelphia Federal Reserve's business activity index fell to 11.4 in March from 23.9 last month, but economists, who had forecast a fall to 20.0, pointed at the index's volatility.
Oil prices, a key input cost for many sectors, also cast a shadow as they scaled fresh highs above $57 a barrel.
"The more oil accelerates away from $55, the more markets are going to pay attention to it. This just throws up additional risks on the horizon," said Michael O'Sullivan, a strategist at State Street Global Markets.
The higher oil price did support oil and gas stocks though, amid hopes their run of record earnings will continue if crude prices remain high. Statoil added 3.2 per cent.
Schering and Novartis gained 4.4 per cent and 1.2 per cent, respectively, on market talk that eagerly awaited data on a key experimental cancer drug might come as soon as next week, ahead of schedule.
Kingfisher was another standout gainer, adding 1.7 per cent after Europe's top home-improvement retailer reported a 16 per cent jump in full-year earnings.
On the downside, Corus was another decliner, off 2.6 per cent, as investors looked past the Anglo-Dutch steelmaker's booming full-year profit to focus on its less certain outlook for the second half of the year.
On Wall Street, the Dow Jones industrial average was up 0.1 per cent to 10,641.9 by 1720 GMT. The technology-laced Nasdaq Composite Index added 0.25 per cent to 2,020.8.