European blue chips were flat in late trade yesterday, as gains in auto and retail stocks like Volkswagen and Pinault Printemps Redoute offset Nokia-led losses in the technology sector.
Trading volumes were light as investors braced for earnings reports from the cream of Corporate America, with quarterly earnings due from IBM and Microsoft after the US close, and General Electric set to follow today.
By 1713 GMT, with only Frankfurt still trading, the FTSE Eurotop 300 index was down 0.07 per cent at 868 points, having straddled a ten-points range all day, and the narrower DJ Euro Stoxx 50 index was down 0.19 per cent at 2,475.
European shares were drifting near the bottom of a trading range, bereft of any clear evidence of a sustainable earnings recovery, said strategists, who nonetheless held out hope that IBM and Co. might still give markets a boost.
"We need firms to begin saying they're confident things are getting better," said Nigel Cobby, managing director of European equities at J.P. Morgan.
However, the fact companies were not yet giving markets the guidance they craved did not mean they would not do so in the near future, he said. "History tells you that firms don't begin talking about a sustainable pickup in earnings until quite a reasonable way into an upturn."
Cobby said it took roughly six months from the time markets bottomed to a time when firms might confidently forecast a sustainable recovery in profits.
Using the Eurotop 300's five-and-a-half-year low in October as his base, he said he did not expect more positive guidance until firms began reporting on their first quarter performance, including any preannouncements from around March onwards.
Market optimists are also hoping any potential conflict with Iraq is cleared up by then.
Technology stocks remained under pressure, weighed down by Nokia after mobile phone casing maker Perlos, one of the firm's key suppliers, warned it would post a loss for 2002. Perlos sank 15.1 per cent and Nokia fell four per cent.
Chip makers Infineon, STMicroelectronics, and Philips also fell between one per cent and three per cent, as investors reacted to an uncertain outlook from loss-making Dutch chip gear maker ASML.
Plans by South Korea's Samsung - the world's biggest memory chip maker - to boost spending aggressively and grab even more market share, was also cited as a factor.
Shares in Pinault Printemps Redoute, Europe's biggest non-food retailer, jumped 7.6 per cent as it faced down a tough retail climate to deliver full-year sales figures in line with expectations.
French construction company Saint Gobain rose 3.2 per cent after Morgan Stanley raised its price target on the stock, saying investors had taken too negative a view of asbestos risks faced by the firm.
The sector was also helped by news that Spanish builder ACS had offered 383 million euros for a further 10 per cent in larger rival Dragados.
The stocks added 2.5 per cent and 6.1 respectively. Among autos, Volkswagen rose 3.6 per cent and Renault leapt 3.8 per cent as strong results from US peer General Motors highlighted the industry's attractions despite high petrol prices and the impact of dollar losses on export markets.
"At around 7.9 times consensus 2003 earnings (European autos) are the cheapest of the main sectors and cheap historically, even though their earnings have remained relatively robust," said John Lawson, industry analyst at Schroder Salomon Smith Barney.
Elsewhere in Europe, oil stocks like BP and Eni were buoyed by a spike in crude prices to two-year highs after UN officials said time was running out for Iraq.
On Wall Street, the Dow Jones industrial average rose 0.2 per cent and the tech-laced Nasdaq Composite edged 0.3 per cent lower.
The tone in New York was helped by benign inflation and jobs reports, but economists cautioned against reading too much into them, citing recent soft retail sales and nonfarm payrolls data.
They also played up the importance of today's University of Michigan consumer sentiment index.
"The Michigan sentiment indicator is going to be very critical. If that comes through on the weak side, it will confirm fears that recovery prospects are not in an ebullient state at them moment," said Bear Stearns economist David Brown.