EUROPEAN stocks have ended another turbulent session little changed after soothing remarks from US Federal Reserve Chairman Alan Greenspan led to a revival in Wall Street's fortunes and helped European issues claw back earlier losses.
Nonetheless, many analysts were sceptical the recovery would last and warned that stocks would most likely remain weighed down by a plethora of concerns ranging from the integrity of corporate America to the impact of a rapidly weakening US dollar.
The pan-eurozone Euro Stoxx 50 index was almost flat at the close of trade at 2,713.73 points.
The British FTSE 100 index rose 0.7 per cent to 4,021.9, having closed at its lowest level since December 1996 in the previous session.
The German DAX 30 index jumped 1.67 per cent to 3,977.756, and the French CAC 40 index fell 0.2 per cent to 3,317.8.
The CAC closed at its lowest level since October 1998 in Monday's session.
"I think you can attribute the rebound to Greenspan," said Barclays stockbrokers strategist Henk Potts.
"The markets were particularly encouraged by his decision to raise his growth forecast for GDP (Gross Domestic Product)."
Greenspan said the US economy was set to emerge from a welter of corporate scandals with better than anticipated growth of 3.5 to 3.75 per cent this year.
Just five months ago, the Federal Reserve forecast 2.5 to 3.0 per cent growth.
Potts said encouraging figures from Merrill Lynch and General Motors had also helped underpin the recovery.
"It's telling us it's not all doom and gloom out there for a change, and quite frankly that's all we've been hearing day after day for a while now," he said.
There was some supportive news on the earnings front from Dutch electronics giant Philips. Its share price rose 1.3 per cent to 23.50 euros after its second-quarter results got the thumbs up from investors.
The group announced a loss of 1.355 billion euro ($2.44 billion), largely owing to a one-off charge of 1.516 billion euro ($2.73 billion) related to the fall in the value of its 3.5 per cent stake in French media group Vivendi Universal.
Stripping out that and other exceptional charges, Philips made a profit of 171 million euro ($308.41 million), above analysts' expectations.
"Those (results) looked pretty good. If we get everybody else doing something pretty similar, then things are going to turn around, but I don't think that's very likely," said BNP Paribas equity strategist David Thwaites.
Among the main losers in Europe drug companies were under pressure again.
Shares in British giant GlaxoSmithKline managed to pare earlier losses to close 2.4 per cent down at 1,147 pence.
The slide followed negative broker comment after Swiss pharmaceutical group Novartis announced yesterday that it would launch Amoxicillin, a generic version of Glaxo's Augmentin antibiotic, in the US.
One overnight winner was P&O Princess Cruises. Its shares surged by 10.5 per cent to 390 pence on reports that the European Commission was likely to clear a proposed takeover of the British cruise operator by US rival Carnival.
P&O Princess has rebuffed the offer, choosing to pursue a merger of equals with Miami-based Royal Caribbean instead.
Shares in Deutsche Telekom surged 6.12 per cent to 10.93 euros after embattled chairman Ron Sommer resigned.
His decision followed pressure from the German government, which still holds a 43 per cent stake in the former state-owned monopoly.
Shares in Daimler-Chrysler climbed 3.78 per cent to 45.35 euros on rumours the auto giant was poised to raise its profit forecast for this year when it releases results on Thursday.
In Amsterdam, the AEX index fell by 1.13 per cent to 363.85 points.
In Zurich the SMI closed 2.48 per cent lower at 5,358; in Milan the Mib 30 edged up by 0.76 per cent to 25,300; in Madrid the Ibex 35 was unchanged at 6,421, and in Brussels the Bel 20 slipped by 0.97 per cent to 2,240.89.
