European stocks notched up small gains on Friday as a persistently high oil price gave the energy sector a boost.
"High oil prices, earnings pessimism, ambiguous economic signals and political uncertainties still weigh, but with the downside well flagged, the risks may be on the upside," said one London-based equity strategist.
At 4:10pm GMT, the Dow Jones STOXX 600 Index, which tracks Europe's 600 largest listed companies, was up 0.3 percent at 238.94. The Dow Jones Euro STOXX Index, which tracks companies in countries that joined the common currency, was 0.2 percent higher at 247.83.
While regional bourses racked up small gains, the jury remains out as to whether there is indeed great cause for earnings optimism.
Highlighting these concerns was Netherlands-based Royal Philips Electronics, which said on Friday that orders are down at its computer chip division.
Scott McGregor, chief executive of the semiconductors division, said the book-to-bill ratio at the division has slipped below the critical 1 level. A book-to-bill ratio below 1 means that fewer new orders have been recorded in relation to the contracts that have been delivered in the same period.
Rabo Securities immediately cut Philips' recurring earnings per share estimate for this year to US$1.85 from US$2.19.
"The valuation looks attractive therefore, but we feel that it is still too early to start buying Philips again," it said.
Philips shares closed flat at US$23.22.
Oil continued to be a dominant theme, with the persistently high price of Brent crude underpinning the heavyweight energy sector.
Food and beverage stocks fell after UK confectionery giant Cadbury Schweppes said its full-year profit will be at the lower end of expectations, due to poor demand in the European soft drinks market over summer. Cadbury Schweppes shares tripped 1.9 percent to £4.2675 pence.
Numis Securities reiterated its reduce rating on Cadbury Schwep-pes, saying the performance from both the US and European beverage markets was weaker than had been expected.
London-listed metals and mining group Vedanta Resources said a rights issue by its key Sterlite Industries subsidiary had increased its stake in the company to 78.8 percent. Vedanta said its increased stake will enhance the earnings flow attributable to Vedanta immediately.
Morgan Stanley mining analyst Paul McTaggart said the percentage of Sterlite obtained by Vedanta was in line with his expectations. Additionally, he thinks the market has already factored in the larger chunk of Sterlite earnings Vedanta will get from its larger shareholding.
Automobile stocks fell after Peugeot Chairman Jean-Martin Folz said he sees no signs of a recovery in the European car market.
"The recovery isn't there," he said in an interview on French radio. "The French market is completely lackluster. The market is very low and isn't moving."
Shares in UK telecommunications company Thus Group slumped 24 percent to £0.13 after the company issued a warning about first-half profitability, raising doubts over the future viability of the company as an independent entity.
At the close, London's FTSE-100 Share Index was up 0.2 percent at 4578.10, while in Paris the CAC-40 Index was 0.6 percent higher at 3673.51. Frankfurt's Xetra Dax Index was up 0.1 percent at 3910.30.
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