European shares snapped a three-day winning streak yesterday after an unexpected drop in crude stocks lifted oil prices, outweighing gains from technology giant Ericsson and drugmaker GlaxoSmithKline.
Ericsson shares closed 4.8 per cent higher amid hopes the Swedish telecoms equipment maker would report forecast-topping earnings today, while shares in GlaxoSmithKline gained 1.8 per cent as investors expected the drugmaker's results, also due today, would signal a recovery to solid growth.
Heavily weighted Shell was a bleak spot, shedding three per cent after going ex-dividend, while shares in HVB Group fell 3.4 per cent amid renewed market talk that Germany's second biggest bank could issue new shares.
The FTSEurofirst 300 index of pan-European blue chips ended 0.1 per cent lower at 1,088.2 points, off from a 31-month peak of 1,093.60 points earlier in the session but still showing gains of 4.5 per cent for the year so far.
Securitas sagged seven per cent after the global security services firm reported lower-than-expected margins in the United States and forecast they would stay under pressure.
Europe's fourth-quarter earnings season has come in slightly better than expected on average, but scorecards due today from heavyweights such as Ericsson and consumer giant Unilever will determine whether recent market gains are justified and if markets can rally further.
"While there's a lot of support around for equities right now, there's still a degree of concern over such factors as the sustainability of economic growth, both in the UK and Europe," said Jimmy Yates, a trader at CMC Group.
BT, France Telecom and DaimlerChrysler also report results today.
Around Europe, London's FTSE 100 ended 0.1 per cent weaker, after briefly breaking above 5,000 points for the first time since June 2002, while Frankfurt's DAX was off 0.4 per cent, and in Paris the CAC-40 shed 0.3 per cent.
The battle for the London Stock Exchange heated up, with Euronext unveiling long-awaited details of its plans to take over the London bourse. Its promise to generate twice the synergies than those expected by German rival Deutsche Boerse helped Euronext shares close up 5.4 per cent.
In further corporate deal activity, UK supermarket chain Somerfield received a bid approach valuing it at £1.03 billion. Somerfield shares closed 14 per cent higher.
A sharp rise in oil prices knocked sentiment after US inventory data showed an unexpected fall in crude oil stockpiles.
German drugmaker Schering lost 2.4 per cent after disappointment over a lack of guidance on key products overshadowed a 11 per cent rise in 2004 operating profit.