Banks, drugs help eurostocks end up

European stocks ended a seven-day losing streak yesterday as healthcare stocks benefited from a move out of economically sensitive media and technology stocks following a host of profit warnings from US tech companies.

Relief that the Bank of England left interest rates on hold and some positive broker comments buoyed UK banks, with Royal Bank of Scotland and HBOS, the country's largest mortgage lender, both adding 1.6 per cent.

Stronger-than-expected data on the US employment market provided some support but was countered by disappointing June retail sales, contributing to another lacklustre performance on Wall Street.

Europe's largest software maker SAP led declines in Europe, hurt again by profit warnings from US rivals, this time Siebel Systems.

SAP shares ended down 2.4 per cent at €124.55 and have now fallen eight per cent in the past three sessions on fears it will be caught in an industry-wide slowdown. Siebel on Wednesday warned its second-quarter revenue would come in below expectations as customers delayed buying at the end of the quarter.

The FTSE Eurotop 300 index of pan-European blue chips closed 0.4 per cent firmer at 985.4 points, having earlier hit a six-week intraday low of 974.5 points.

Turnover was a moderate €2.6 billion, and stocks to fall outnumbered those that rose by around three to two.

The narrower DJ Euro Stoxx 50 index rose 0.5 per cent to 2,776.9 points.

The benchmark Eurotop 300 index has lost nearly four per cent since the end of June as a Federal Reserve quarter-point interest-rate increase, mixed data showing growth may be peaking in the world's largest economy and a new rally in oil prices have dented sentiment.

"Markets remain stuck in their ranges, unduly nervous about the sustainability of economic growth and profitability," said Mark Tinker, head of strategy at independent brokers Execution.

"Most major equity markets are on the cheap side of fair value, offering modest, but nevertheless attractive, upside."

Europe's results season is due to kick off next week and analysts say companies will struggle to match the surprisingly strong earnings of the first quarter.

"We are on track for earnings growth but the number of positive surprises is diminishing," said Mark Bon, a London-based fund manager at Canada Life. In New York, the blue-chip Dow Jones industrial average was steady at 10,244.7 points, while the Nasdaq Composite Index fell 0.4 per cent to 1,958.5 points by 1614 GMT.