European stocks end steady in holiday-hit trade

European shares ended on a tame note in a truncated session yesterday ahead of the Christmas holiday break, but technology shares including Nokia gained as optimism about earnings boosted Asian chip makers.

Dutch chip equipment maker ASM International rallied 15 per cent after it said a break-up of the company would be up for discussion at its next shareholders' meeting.

The pan-European FTSEurofirst index of 300 leading shares closed 0.05 per cent up at 1,276.2 points, having struck a 45-month high of 1,280 points in the previous session.

"It's all about going home today," said one trader. " No one's got business on their agenda."

Volumes were thin, with only about 880 million shares traded compared with average volumes of about 2.5 billion shares. The London Stock Exchange closed early at 1230 GMT (1.30 p.m. local time), while the Milan bourse had no after-hours trading.

The US and European stock markets are shut on Monday, while the LSE will remain closed on Tuesday also.

The pan-European 300 index has surged 22 per cent so far this year, its best annual performance since the technology bubble in 1999, when stocks had rallied 34 per cent.

"Our expectation is that earnings growth will again be positive next year," said Jeff Currington, head of European equities at Credit Suisse Asset Management.

"It won't perhaps be as strong as it has been this year because for most European companies earnings have been boosted by the strength of the dollar.

A rebounding euro is seen as a risk to earnings growth for Europe's export-dependant corporate sector next year. US stocks were slightly lower yesterday after sales of new US home fell sharply. The Dow Jones industrial average was down 0.05 per cent at 10,883.7 points and the tech-laced Nasdaq index edged up to 2,247.9 points.

Around Europe, London's FTSE 100 index ended flat, Paris's CAC-40 edged up 0.12 per cent and Frankfurt's DAX rose 0.4 per cent. Zurich's SMI fell 0.2 per cent.

Nokia rose 1.2 per cent and Philips added 0.6 per cent.

Shares in German industrial gas and engineering group Linde gained 2.6 per cent to €65.9 as investment bank UBS raised its price target to €62 from €59.

Among gainers, Norwegian oil firm DNO rallied 8.6 per cent, adding to a gain of 35 per cent in the previous session after the company said it had struck oil with a well in Iraq. However, the company's chief executive said yesterday that it was too early to estimate the size of the find.