European shares mixed, unmoved by data and Wall St

European stocks remained mixed yesterday afternoon after US employment data did little to either dispel or confirm fears that the world's biggest economy might be heading back towards recession.

Classic defensive plays like France's L'Oreal and Anglo-Dutch consumer group Unilever attracted risk averse buyers, as did shares in tobacco companies and heavyweight energy stocks like Britain's BP.

Technology stocks, media and financials were weaker. By 1408 GMT, the FTSE Eurotop 300 index of pan-European blue chips was up 0.15 per cent and the narrower DJ Euro Stoxx 50 index was 0.30 per cent higher.

Wall Street started slightly lower, denting sentiment. The US data showed that only 6,000 new jobs were added to non-farm payrolls in the US in July, far fewer than the 69,000 economists had expected.

However, the figures for the previous month were revised sharply upwards and the unemployment rate remained stable at 5.9 per cent, providing some reassurance on the state of the US labour market.

"Overall, the data was not too far from what was expected if we take the July and June figures together, but it's still pretty sluggish, so we're not going to get any extra consumer spending out of jobs growth," said John Calverley, chief economist and strategist for American Express Bank.

"The report was inconclusive, although other data this week was disappointing and certainly raised the risks of a double dip," he added.

Many observers had been expecting a grim reading following poor US consumer confidence, growth and manufacturing figures earlier this week.

European stocks wobbled briefly after the data but soon steadied and then drifted in and out of positive territory.

The London, Paris and Madrid benchmarks were higher while Frankfurt and Milan were in the red.

"We're wary of getting too negative but at the same time, the economic data is clearly not as supportive as it was a couple of months ago," said Stephanie Gerrard, European fund manager at Aberdeen Asset Management.

The Dow Jones industrial average, the broader Standard & Poor's 500 Index and the tech-laden Nasdaq Composite fell by between 0.5 and 0.8 per cent.

Banking stocks eased after Britain's Lloyds TSB Group warned of a tough second half while high street rival Barclays suffered further fall-out from its poor first-half results on Thursday.

Lloyds shares lost 1.4 per cent and Barclays offloaded a further 4.7 per cent.

Shares in German financial group MLP slumped 25.2 per cent due to accounting jitters and talk of a possible profit warning, although the company said it was standing by its forecasts for now.

Shares in French bank Societe Generale jumped 5.6 per cent even though it said its net profit tumbled 41 per cent in the second quarter, hit by 265 million euros in provisions for a decline in the value of its portfolio of industrial holdings.

Investors looked through the news, welcoming the bank's robust underlying growth and resilience in its investment banking and retail operations.

Spanish blue-chips gained due to better news from Brazil, where many of them are highly exposed. The Brazilian real, which has been sliding recently, rallied 10 per cent after the country unveiled its strongest trade balance in eight years.

Spain's biggest bank, Santander Central Hispano, added 2.5 per cent.

Dutch electronics firm and chipmaker Philips was Europe's biggest blue-chip decliner, down seven per cent on fears of a stalled semiconductor recovery and falling prices for flat computer screens.

Morgan Stanley cut its view on revenues for the global microchip industry to 15-20 per cent for the full year 2003 from a previous 20-25 per cent.

German chipmaker Infineon lost 5.4 per cent and Franco-Italian STMicroelectronics gave up 4.4 per cent.

Telecom equipment makers were also weaker, and Finnish telecom operator Elisa Communications dropped 13 per cent to lifetime lows after it reported a surprise loss and warned 2002 earnings would fall on writedowns and gloomy market conditions.