European stocks ended a touch lower yesterday, weighed down by miners as copper prices languished, and telecom shares after media reports Vodafone was considering a bid for India's Hutchison Essar.
Merger speculation sent shares in medical device maker Smith & Nephew Plc up after a report of a planned private equity bid, while French advertising group Publicis rose on news it was buying Digitas Inc.
"On a fundamental basis I think this is a sustainable level and all in all we're positive for 2007," said Philipp Musil, fund manager at Constantia Privatbank.
The FTSEurofirst 300 index of top European shares closed down 0.2 per cent at 1,479.1, shrugging off a downward revision to US third quarter gross domestic product data.
Among national indexes, Britain's resource-heavy FTSE 100 and Germany's DAX edged down 0.2 per cent, while France's CAC 40 ended 0.1 per cent lower.
"There is a growing feeling that as many markets reach new highs they must be peaking. There are some very positive underlying trends that, at least for the immediate future, support the opposite view," said Bob Wigley, chairman of Merrill Lynch Europe Middle East and Africa, in a report.
"I do not agree with the view that a short term reversal of fortunes is inevitable."
Rio Tinto led mining stocks lower, trading down 2.6 per cent, while BHP Billiton fell 0.7 per cent and Antofagasta fell 2.3 per cent as copper traded around eight-month lows.
Vodafone dropped 1.5 per cent after a source close to the matter said Hutchison Whampoa has received bid approaches for its Indian mobile business, sparking speculation Vodafone and Reliance Communications may become embroiled in a $13.5 billion-plus bidding war.
"This is far from a done deal," said one trader. "There is slight concern that there are others out there and the price tag may be higher than this."
Elsewhere in the sector, BT dropped 1.3 per cent and Telefonica slipped 0.8 per cent.
Royal Dutch Shell bucked a weaker oil sector to end broadly flat after it said Gazprom will buy 50 per cent plus one share in the Sakhalin-2 oil and gas project from Shell and its Japanese partners for $7.45 billion.
Other oil producers fell as crude lost 1.5 per cent to trade around $62.70, with BP down 0.4 per cent. In other oil news, Burren fell 5.1 per cent after the President of Turkmenistan's death cast doubt over its operations in the Central Asian nation.
As merger and acquisition activity continued to ripple through the market, Smith & Nephew rose 3.4 per cent following a media report that a private equity firm was planning to bid.
French media group Publicis gained 5.1 per cent on news it was buying interactive and direct-marketing firm Digitas for $1.4 billion.