Dollar erases Europe stock gains
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Investors are keeping a close eye on U.S. indicators.
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LONDON, England (Reuters) -- European shares ended a choppy session near breakeven on Thursday as weakness in the dollar unnerved investors, preventing benchmark indexes from reaching 2003 highs despite a rally by carmaker DaimlerChrysler.
Stocks dipped after an unexpected rise in U.S. jobless claims sent the dollar to an all-time low against the euro for a fifth straight session, but they largely recovered as the U.S. currency clawed back its losses.
DaimlerChrysler jumped 3.8 percent as overnight testimony at a U.S. trial boosted hopes the auto giant could prevail in a lawsuit over its 1998 merger, encouraging investors back into the stock which has underperformed its peers in recent weeks.
The FTSE Eurotop 300 index of pan-European blue chips closed 0.1 percent weaker at 945 points, just 3-1/2 points below its 2003 peak, on solid turnover of three billion euros. Advancers and decliners were almost evenly matched.
The narrower DJ Euro Stoxx 50 index was flat at 2,693 points, having touched a high for the year of 2,700.42 during the day.
Many analysts remained confident further gains can be made by year-end.
"Growth is recovering, corporate earnings are recovering and valuations are fine," said Adrian Darley, a senior investment manager in European stocks at Gartmore Investment Management.
"All of that together is quite a positive equity environment. We've seen markets go up on those arguments over the last six months and I don't see that anything has really changed that story."
Around Europe, London's FTSE 100 closed 0.3 percent lower, while Paris's CAC-40 ended down 0.2 percent. In Zurich, the SMI fell 0.3 percent and Frankfurt's DAX closed unchanged.
"Our central case right now is that the world is still in pretty good shape and you want to be buying equities," said Credit Suisse First Boston strategist Bill McQuaker.
Dollar dips, jobs wobble
While a rising euro could hurt the earnings of some European exporters, McQuaker cautioned against reading too much into currency moves.
"Numbers have held up remarkably well all year even though the currency has been an issue. The offset is that, although there is a problem with price, export markets around the world have been better than companies anticipated. Demand has been there, although they maybe had to give up a little bit on margin."
In New York, the blue-chip Dow Jones industrial average was 0.4 percent firmer at 9,914 points, while the Nasdaq Composite Index rose 0.2 percent to 1,964 points at 1714 GMT.
Data showing that U.S. jobless claims unexpectedly rose last week sounded a note of caution in what has otherwise been a string of strong data.
The Labor Department said first-time claims for unemployment benefits rose to 365,000 compared with a revised 354,000 the previous week but interest is focused on Friday's more complete picture of the jobs market: the non-farm payrolls number.
Insurers were among the sectors that fell, led by a 1.7 percent slide in Italy's Generali after Italian bank UniCredito offered its entire stake in the insurer via a 1.2 billion euro exchangeable bond.
The chemical sector was also softer, with leader BASF and peer Bayer both down nearly one percent after the German chemicals association VCI said it expected a modest recovery next year but with slightly lower producer prices.
Anglo-Dutch publisher Reed Elsevier sank 7.1 percent in Amsterdam after the group said its earnings would grow at a slower pace in 2004 due to poor economic conditions, a soft education market and increased investment.
On the plus side, shares in European aerospace company EADS hit a new high for the year after the group said it had a "real chance" of winning a contract to supply Britain with air tankers. The stock closed up 3.5 percent at 20.06 euros.
British security firm Securicor powered 12.4 percent higher after saying it was cautiously optimistic on its prospects for 2004.
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Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
