European stocks end steady

European stocks closed flat in thin trade yesterday as near-record oil prices dampened the outlook for corporate profit growth but takeover hopes boosted shares in the London Stock Exchange.

Standout gainers included London-listed miner Xstrata, up 6.2 per cent after it bought a near 20 per cent stake in Canada's Falconbridge to add nickel to its suite of commodities.

Retailer Carrefour put on 0.2 per cent after a weekend press report revived speculation US rival Wal-Mart may be considering a bid, despite Carrefour's denial of talks. By 1550 GMT, the pan-European FTSEurofirst 300 index was steady at a provisional close of 1,192.9 points with 1.3 billion shares traded.

Activity was muted by a market holiday as markets were closed for Assumption Day in a number of centres, notably Italy.

The FTSEurofirst index, up 14.5 per cent so far this year, hit a three-year high last week on robust corporate profits and strategists said equities were supported by valuations.

"The market has been concerned about the sustainability of earnings growth and earnings have been coming in meeting expectations or beating expectations," said Tristan Hanson, a global strategist at Cazenove.

"That gives people more confidence in the valuations and equities do look cheap against other assets," said Mr Hanson, adding that mining, energy and telecoms were among the sectors Cazenove fancied.

He said signs of merger and acquisition activity pointed to the fact that valuations in equity markets were attractive.

The DJ Euro Stoxx 50 index fell 0.2 per cent to 3,326.4 points. Shares in the London Stock Exchange rallied nearly five per cent after Australia's top investment bank Macquarie Bank said it may team up with other investors to make a cash bid for Europe's largest stock market operator, sparking yet another round of takeover speculation.

US light crude oil prices traded near record highs at $66 a barrel with doubts that the oil industry can pump and refine enough crude underpinning the market.

Telecoms were stronger, with Vodafone up 1.2 per cent at 151p after rallying as high as 153p - its strongest level since early 2002. Cable & Wireless rose 1.2 per cent.