European shares were mixed yesterday as nagging worries about the stuttering economy and the looming corporate earnings season were offset by television images of US troops being welcomed into the heart of Baghdad.
French luxury goods group LVMH topped the blue-chip leaderboard after reaffirming its full-year outlook, while Belgian drugs group UCB rose on data showing a rise in new prescriptions for its blockbuster drug in the US.
Among the losers, French catering giant Sodexho sank after it posted weak sales, while insurers such as Aegon and ING were dented by credit rating downgrades.
But the market's main focus of attention was on events unfolding in Iraq, which helped the pan-European FTSE Eurotop index rise more than one per cent higher during the day.
Traders were transfixed by live television images showing jubilant Iraqis tying a noose around a huge statue of President Saddam Hussein in central Baghdad, and being helped by US troops to pull the statue down.
"The images are incredible. The phone hasn't rung for about 40 minutes," said one London-based pan-European share trader as the statue was pulled to the ground by a US armoured vehicle.
"The feeling in the market is that the war is over. We thought this was going to be two, three or four weeks in the future, not right now," the trader said.
By 1550 GMT, with only Frankfurt still trading, the FTSE Eurotop 300 index of pan-European blue chips was flat at 810 points, while the narrower DJ Euro Stoxx rose 0.3 per cent to 2,286.
Among national benchmarks, the German Dax index rose 0.3 per cent, the French CAC-40 eased 0.2 per cent and the British FTSE 100 lost 0.2 per cent.
LVMH was among Europe's biggest gainers, rising 3.8 per cent after it reported resilient growth at its Louis Vuitton leather goods brand and maintained its full-year guidance.
Swiss peer Richemont added 3.7 per cent. Elsewhere Swiss pharmaceutical group Roche firmed 3.8 per cent after UBS raised its target price, while Britain's Imperial Chemical Industries added 3.4 per cent after appointing a well-regarded executive as its new boss.
In the losers column, Europe's biggest insurer ING fell 2.6 per cent, hit by a double whammy of credit rating downgrades from rival credit rating agencies Moody's and Standard & Poor's.
Aegon fell 2.6 per cent after Standard & Poor's cut its rating on the stock and after a Dutch broker cut its earnings estimates for the firm.
German insurer Allianz bucked the trend, rising 3.8 per cent. The company earlier announced that shareholders participating in its 3.5 billion-euro rights issue would be offered seven new shares for every 15 already held.
Strategists said that while the market could rally further in the short term, the gains seen earlier yesterday probably accounted for what little remained of the war risk premium.
Growing confidence that the US-led war against Iraq will end soon has helped lift Europe's main indices by a fifth since last month's six month lows.
"What we're seeing is probably the end of the risk premium due to the events in Iraq. After this, much will depend on the first quarter results," said Thierry Lacraz, European market strategist at Picet & Cie in Geneva.
"But we shouldn't expect too many good results given the recent economic indicators, particularly those that we've seen from the US in the last few weeks," he added.
The International Monetary Fund provided a reminder of the difficulties the global economy faces in its semi-annual World Economic Outlook.
It said the world's economy should grow moderately this year but risks - a long involvement in Iraq, spreading conflict, stock market volatility, a housing bubble and deflation - clouded an unusually uncertain outlook.
On Wall Street, optimism about the apparent end to Saddam's rule lifted the Dow Jones industrial average 0.1 per cent, while the tech-laced Nasdaq Composite shed 0.2 per cent.