Europe stocks end week flat
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LONDON, England (Reuters) -- European shares closed flat on Friday and likewise for the week as investors paused after months of driving bourses to near 17-month highs in anticipation of the generally solid earnings news being released.
There were some pockets of activity as fresh merger talk gripped pharmaceuticals, with French drugmaker Aventis hiring investment banks to prepare for an expected $60 billion bid from domestic rival Sanofi-Synthelabo.
Sanofi shares sank seven percent to 57.7 euros, while Aventis rose 1.7 percent to 57.5 euros.
Italian banks were also active, gaining on continued speculation of foreign takeovers despite denials from Dutch ABN AMRO and Italy's Capitalia of a report that the former was studying a buyout of latter.
German banks like Deutsche Bank and HVB rose as bankers and officials talked up the prospect of a foreign bid for a German bank or a domestic merger.
The overall market's pause comes at a time when the euro's strength is a cause of concern for investors in currency sensitive shares like automakers that export to the U.S.
The euro was trading at $1.26 as bourses shut, about three cents from its recent record high, but analysts said breaching the "pain barrier" of $1.30 was only a matter of time, despite efforts by ministers to talk it down.
Investors looked to the Federal Reserve Open Market Committee meeting next week for new impetus, and although no change in U.S. interest rates is expected, any comments from the central bank will be seized on.
"There is a palpable sense of the markets waiting with baited breath for some directional leads from next week's FOMC and what kind of new spin, if any, the Fed may throw on U.S. rate policy," Bear Stearns Chief European economist David Brown said. The FTSE Eurotop 300 index ended 0.15 percent down at 992.33 points after a near 17-month high on Thursday. For the week, the benchmark is little changed, but up 3.5 percent for the year.
"The market is just running out of steam and regrouping a little bit," said Mark Tinker of Execution stock broker.
Investors placed their cash in the market early in the year in anticipation of good earnings, sending shares higher, but now they are taking some profits, he said.
"The market has not come back far enough to get the long-term value investors back in. We are due for a little pullback and it looks like it could be starting," Tinker said.
Wall Street has also largely been rangebound as the quarterly reporting season gears up for another 200 top companies next week, though dealers say much of the good earnings news is already factored in.
The DJ Euro Stoxx 50 index, which tracks euro zone blue chips, ended flat at 2,892.54 points, after hitting its best level since mid July 2002 earlier in the session. On Wall Street, the Dow Jones industrial average was flat at 10,612 points, while the tech-laden Nasdaq Composite rose 0.5 percent to 2,129 points.
Shares in Airbus parent EADS rose 0.9 percent to 19.2 euros after an industry source told Reuters that Britain is set to award a 13 billion pound military plane contract to a consortium led by EADS.
Autos were among those hit on Friday, with Germany's Porsche down on news that fewer people had bought its sportscars.
A strike threat from Germany's engineering workers at Porsche, DaimlerChrysler and elsewhere in the country, added to the sector's weakness.
Meanwhile, Spanish electricity firm Union Fenosa jumped 3.5 percent to 15.2 euros, extending a rally after German peer E.ON sold a stake in the company earlier this week, removing concerns about a stock overhang.
Dutch market maker Van der Moolen said its U.S. specialists business may face civil action from a U.S. market watchdog, sending the stock down four percent to 6.3 euros.
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