* FTSEurofirst 300 ends flat
* M&A boosts utilities
* Unilever pulls food producers lower
By Patrizia Kokot
LONDON, July 31 (Reuters) - European shares ended flat
following a volatile session on Thursday driven by a mixed set
of U.S. economic data and a flurry of company results.
The FTSEurofirst 300 index <> of top European shares
closed 0.06 percent lower at 1,180.04 points, after swinging
between 1,171.24 and 1,189.56 points.
Corporate earnings were mixed with HBOS <HBOS.L>, Reed
Elsevier <REL.L> and telecom groups Telefonica <TEF.MC> and
France Telecom <FTE.PA> releasing strong figures, while Unilever
<ULVR.L> and Sanofi-Aventis <SASY.PA> failed to impress.
Overall, the scale is tipping towards the
better-than-expected scenario, said Stefan de Schutter, an asset
manager at Alpha Trading in Frankfurt.
"This week is better than last week in terms of earnings and
it's generally not as bad as people had feared," he said.
Some economic data was relatively promising as a regional
indicator of U.S. business activity came in ahead of forecasts.
However, an earlier batch of data on U.S. weekly jobless
claims and gross domestic product growth, disappointed and banks
swung from top gainer to the biggest drag, before climbing back
into positive territory by the close.
"Banks are sentiment shares. They saw the biggest losses
when the sentiment was bad and therefore also have the biggest
potential for recovery," de Schutter said.
British lender HBOS <HBOS.L> surprised investors with
better-than-expected first-half results. The stock rallied 7.1
percent, pushing the DJStoxx European banking index <.SX7P> 0.2
percent higher.
Anglo-Dutch publisher Reed Elsevier <ELSN.AS> added 4.7
percent after beating the consensus and issuing an encouraging
outlook.
Other companies that beat forecasts included AstraZeneca
<AZN.L>, up 3.3 percent, K+S <SDFG.DE>, up 8.7 percent, SGL
Group <SGCG.DE>, up 0.5 percent, Aker Solutions <AKSO.OL>, up
15.7 percent and Neste Oil <NES1V.HE>, which added 1.2 percent.
Telecoms were also in the spotlight as both France Telecom
<FTE.PA> and Spain's Telefonica <TEF.MC> confirmed their
forecasts for the full year.
France Telecom added 3 percent, Telefonica was up 0.4
percent and Deutsche Telekom <DTEGn.DE> gained 2.4 percent.
BT Group <BT.L> however tumbled 12 percent after it missed
estimates for first-quarter core earnings and worried investors
with key indicators such as its free cash outflow and margins.
M&A BOOSTS UTILITIES
Utilities were also prominent gainers on takeover
manoeuvres.
Spain's Union Fenosa <UNF.MC> jumped 8.4 percent after rival
Gas Natural <GAS.MC> agreed to buy a stake in the company from
ACS <ACS.MC> and subsequently launched a full takeover bid. Gas
Natural lost 5.1 percent and ACS rose 4.4 percent.
The electronics and electrical equipment subsector was also
boosted by M&A chatter, with German solar cell maker Q-Cells
<QCEG.DE> adding 6 percent after it extended a silicon supply
contract with Timminco <TIM.TO> and amid talk that clean
technology investment group Good Energies would up its stake in
the group. A spokesperson for Good Energies denied the
speculation.
Epcos <EPCGn.DE>, Europe's biggest maker of passive
electronic components soared 28.6 percent after Japan's TDK
<6762.T> said it is planning to buy the group for $1.9 billion.
Heavyweights BP <BP.L> and Total <TOTF.PA> advanced 2.1 and
0.4 percent respectively.
Shell <RDSa.L> shed 2.1 percent after saying it decided
against the sale of its Infineum unit and announced that is
losing 40,000 barrels per day of Nigerian oil output after
militants blew up parts of a key pipeline this week.
The oil major, however, initially pleased investors with a 5
percent rise in second-quarter current cost of supply income,
which beat analysts' forecasts.
Food producers were the biggest drag after Unilever <ULVR.L>
delivered second-quarter earnings which some analysts described
as "poor quality".
The stock plummeted 8 percent in London, dragging peers
Danone <DANO.PA> and Nestle <NESN.VX> 0.9 and 2.2 percent lower,
respectively.
Other decliners included French drugmaker Sanofi-Aventis
<SASY.PA>, which fell 4.7 percent after its quarterly sales and
profit disappointed investors.
Solvay <SOLB.BR> sank 8.7 percent after the chemicals and
drugs maker reported a worse-than-expected fall in
second-quarter profit, hit by energy and raw material costs.
(Editing by Erica Billingham)
