European blue chips toyed with a 10th consecutive session loss late yesterday, as gains in defensive utility and energy stocks like E.ON and BP helped offset a pre-results slump in Spanish banks.

Regional indices traded flat in brisk trade and remained around their lowest levels in almost six years, as investors braced for a key speech by US President George W. Bush due after the close, ahead of a possible war with Iraq.

Strategists said valuations were increasingly tempting but that now was not the right time to pile back into the market.

"Recent gains in the euro are likely to trigger another round of earnings downgrades, so until that is done or geopolitical issues are resolved, we remain cautious," said Saul Henry, European equity strategist at UBS Warburg.

By 1646 GMT, with only Frankfurt still trading, both the FTSE Eurotop 300 index of pan-European blue chips and the narrower DJ Euro Stoxx 50 index were flat.

Declining stocks outnumbered risers by about three to two. That took the Eurotop's cumulative loss over the last 10 sessions to 12.4 per cent.

The Eurotop 300 has chalked up a double-digit per centage loss or gain over 10 days on 26 separate occasions since the September 11, 2001 attacks on the United States. This is a sign that markets may have become more volatile, given that the benchmark managed that feat just 15 times in the previous nine years, 13 of which were during the LTCM crisis of 1998.

Shares in Madrid underperformed as Santander Central Hispano and Banco Bilbao Vizcaya Argentaria slid 0.5 per cent and 2.13 per cent respectively ahead of their full-year results on today and tomorrow, while a 2.5 per cent drop in Nokia dragged on Nordic markets.