A rally in Vodafone Group helped European shares hold modest gains yesterday afternoon, but a cautious outlook from insurer Axa, troubling German economic data and worry over Iraq clipped the advance.
Vodafone, Europe's biggest mobile phone operator, topped all forecasts with strong rises in first-half core earnings and revenue to send its shares jumping 10.66 per cent to 109 pence.
Shares in Vivendi Universal slid 6.7 per cent to e12.80 after Vodafone said it expected the media group to counter Vodafone's bid for French mobile operator Cegetel.
Axa shed 4.6 per cent to e12.56 after saying it was cautious on growth in operating earnings this year, news that weighed on the rest of the sector.
By 1446 GMT, the FTSE Eurotop 300 index was up 0.5 per cent at 884 points, while the DJ Euro Stoxx 50 index, which tracks leading euro zone blue chips, was flat at 2,433 points.
On Wall Street, the Dow Jones industrial average rose 0.5 per cent to 8,403 points. The Nasdaq Composite gained 0.9 per cent to 1,332 points.
Iraq simmered in the background after the country's parliament voted unanimously to reject a UN resolution to disarm Baghdad but left the final decision to Iraqi President Saddam Hussein.
Shares in German drug group Bayer AG rallied six per cent to &euor;20.79 after the inventor of aspirin no longer insisted on holding a majority in any partnership involving its drugs unit, paving the way for a possible deal with a global pharmaceutical leader.
In the banking sector, IntesaBci, Italy's biggest bank by assets, reported that its third-quarter loss narrowed to e58 million from 323 million a year ago. The stock rose three per cent to e1.58.
But shares in Luminar, Britain's biggest nightclub operator, fell 8.8 per cent to 590 pence. The group said its goal of increasing profit by 15 percent a year was under threat as cash-conscious parents cut back allowances for students.
Meanwhile, the recovery in Germany, Europe's biggest economy, looked threatened after the ZEW institute's index based on a survey of analyst and investor expectations for the German economy collapsed in November by 19.2 points to 4.2.
The numbers indicated that Europe's biggest economy will nosedive in the first half of 2003, the institute said.
"The ZEW has generally been a good lead indicator for the Ifo and the Ifo is generally a good fit with German GDP data, so it's not looking rosy for the German economy," said Matthew Wickens, global economist at ABN Amro, the Dutch bank.
"We knew Europe's biggest economy was in a bad state, and now things have got worse," Wickens said.