European shares eked out gains for a fourth consecutive session yesterday as Zurich Financial cheered up insurers and helped the broader market defy another record high in crude oil prices.
The technology sector extended its recovery, while mining stocks also fared well.
But Telekom Austria sank 19.5 per cent to €11.4 on news that talks on a merger of the company with Swiss peer Swisscom had collapsed.
Shares in Swisscom, which has long wooed its Alpine neighbour, ended flat at 409 Swiss francs as the group's chief executive Jens Alder said it was the end of the on-off saga between the two firms, with no other deals on the horizon.
Meanwhile, Belgian image technology firm Agfa Gevaert grabbed a spotlight, its shares rallying 13 per cent to €21.6 on news it was disposing of its photographic film business as it responds to the digital camera boom.
The FTSE Eurotop 300 index ended up 0.2 per cent at 953.58 points, but volume was an anaemic €1.9 billion.
"You can't read much into a rally that occurs on such little volume. A lot of players are out of the market so movements are getting exaggerated," said Nigel Cobby, managing director of European equities at JP Morgan bank.
The Eurotop 300 index is about two per cent above the 2004 low of 934.72 points plumbed early on Monday as investors fretted that a string of record highs in crude oil would slow economic growth.
"The problem is that the oil price is affecting sentiment a lot more than it's affecting the real economy," Mr Cobby said.
"Markets are overdue a rally, the oil price is overdue a fall. Quite when it happens I don't know, but there is plenty of cash out there," he added.
The DJ Euro Stoxx 50 index ended up 0.13 per cent at 2,630.71 points.
Dealers expected the market to remain relatively cautious ahead of today's options expiry in major stock markets, which can often cause volatility.
Meanwhile, US crude rose to a new record of $48.20 a barrel as European bourses were closing, but shares remained relatively resilient.
"What it's telling you is that the knee-jerk reaction that oil prices going up is bad for equities is effectively diminishing," said Mark Tinker of Execution stockbroker.
Oil prices are now up 28 per cent since the end of June, but the DJ Stoxx energy sector index hit this year's peak in early August, and is down 5.4 per cent since then as some in the sector bet crude prices will peak.
Today, the energy index fell 0.17 per cent, with leader BP down 0.7 per cent at 487p.
Shares in Zurich Financial rose 0.7 per cent to 176.75 Swiss francs after its earnings beat market forecasts, while sector peers Swiss Re, Axa and Aegon all rose.
Technology was among the strongest sectors as investors returned to a beaten down area that has outperformed the overall market's advance this week.
Leader Nokia, and chip-related stocks like ARM, Philips and Infineon, modestly outperformed the overall market.
"If you look at which sectors have been outperforming in this mini-rally we have had in the past few days, then tech comes close to top of the list," a strategist at a US investment bank said.