A clutch of strong earnings from blue chips like Dutch insurer ING helped Europe's top stock indices end a touch higher yesterday, but US crude oil prices back above $43 a barrel cast a shadow.
Smith & Nephew shares also soured the mood, shedding 10 per cent after the British medical device firm missed forecasts for second-quarter profits.
Investors held their breath ahead of today's report on US employment in July, hoping for signs that growth in the world's biggest economy was sustainable, but at the same time were wary that stellar numbers may lead to further monetary tightening.
The FTSE Eurotop 300 index of pan-European blue chips added 0.12 per cent to end at 977.3 points, while the narrower DJ Euro Stoxx 50 index rose 0.19 per cent to 2,689.3 points.
Worries that rising interest rates and oil prices may hamper economic growth has dogged global stock markets in recent weeks. Investors have largely shrugged off solid second-quarter earnings as they feared corporate profits may not live up to high expectations in the coming quarters.
A report showing that the number of people filing for initial US jobless aid had fallen 11,000 last week slightly cheered investors, but they remained cautious ahead of yesterday's employment report.
Economists polled by Reuters expect non-farm payrolls to rise 228,000 after June's modest gain of 112,000.
"Signs of continued economic expansion in the US - including better than expected jobless claims - are once again suggesting that the (Federal Reserve) may well take action when they meet next week," said Geoff Langham, head of trading at CMC Group.
"The prospect of this will add to the pressure on global equities, leaving traders in a cautious mood over the next few days."
Oil prices rebounded from a heavy fall on Wednesday as a decision by Russia's Justice Ministry to revoke permission for oil major YUKOS to use its bank accounts rekindled fears about a global oil supply crunch. Many investors took in stride an expected quarter-point interest rate rise by the Bank of England and the European Central Bank's decision to leave interest rates unchanged at two per cent.
"The Bank of England is trying as hard as it can to let consumers down gently," said David Brown, economist at Bear Stearns.
"By hiking 25bp, instead of the more draconian 50bp, the (Bank) has arguably given a hint that it thinks its policy is starting to work. If it did not think that its actions were bearing fruit we feel that (it) would have opted for a full 50bp hike."
Shares in ING, Europe's biggest insurer, gained 2.9 per cent after the Dutch group trumped market expectations with a 38 per cent rise in second-quarter group core profit, fuelled in part by strong banking operations.
Barclays gained 2.4 per cent as the British bank beat first-half profit estimates with solid growth in its investment-banking business.
HVB Group ended 3.8 per cent higher as the German bank took a big step towards repairing investor confidence with unexpected higher quarterly earnings and a pledge to make at least €1.4 billion of profit this year.
Belgian supermarket chain Delhaize also reported second-quarter net profit that significantly beat analysts' forecasts, boosted by better sales and tight cost discipline. Delhaize shares closed 10.6 per cent higher.
On the downside, Clariant fell four per cent as a cautious outlook overshadowed the Swiss chemical maker's swing to a higher-than-expected profit.