LONDON, Oct 20: European shares pared early gains by the close of trading on Thursday, but ended higher on upbeat results from foods group Nestle, while Nokia disappointed and topped blue-chip fallers.

Nokia’s shares fell 4.7 per cent as third-quarter results showed demand growth came at the expense of profit margins.

The pan-European FTSEurofirst 300 index was 0.3 Per cent higher at a provisional close of 1,176.3 points, but below the day’s high of 1,188.7 points.

In a busy day for results, the index recovered some of the previous day’s 1.7 per cent fall when inflation fears hit markets.

The big results have not been too bad, but the market still seems to lack confidence, said one trader.

The pan-European index is still up 13 per cent so far this year, and fund managers remained positive on equities.

On balance, we believe companies will continue to grow their earnings while buoyant liquidity and improving business confidence will encourage investors to seek assets with potentially higher returns, said Andrew Milligan, head of global strategy at Standard Life Investments. US stocks dipped by the close of European trading hours.

Nokia reported quarterly results in line with analysts’ forecasts but showed a fall in average selling prices.

Other analysts said a lack of a specific earnings guidance for the fourth quarter had hurt Nokia’s shares.

Across Europe, the FTSE 100 ended flat, and both Frankfurt’s DAX and Paris’s CAC-40 rose 0.4 per cent. Zurich’s SMI jumped 0.9 per cent, boosted by a 3.7 per cent rise in Nestle’s shares.

Drugmakers AstraZeneca and GlaxoSmithkline both fell more than 1.5 per cent after bigger US rival Pfizer reported a 52 per cent drop in quarterly profit and withdrew its financial outlook through 2007. Pfizer’s shares fell nearly 8 per cent to an eight-year low.

Shares in German software company SAP rose to a 3-1/2-year high of 148.8 euros as it reported forecast-beating licence sales and raised its full-year outlook.

Nestle gained after reporting higher-than-expected sales and reaffirmed its year targets, compared with rivals that have cut profit forecasts due to soaring commodity prices.

Among losers, shares in Lafarge fell 2 per cent after the world’s largest cement maker raised doubts over whether it could meet an already-reduced lower profit forecast.

—Reuters