But fears Vodafone may enter a costly bidding war for a AT&T Wireless weighs on FTSE 100 gains.
PARIS (Reuters) - European shares ended marginally higher Monday as reinsurer Swiss Re rallied after a bullish outlook, but fears cell phone titan Vodafone may enter a costly bidding war for a U.S. acquisition capped gains.
Trade was subdued as a holiday kept Wall Street shut, but there were a few standout movers, including oil stocks, which were buoyed by the possibility of further price-boosting production curbs by OPEC.
BP (BP: Research, Estimates) and Total (TOT: Research, Estimates) added about one percent after OPEC President Purnomo Yusgiantoro said the cartel might decide to cut output limits again in May if supply curbs in April were not enough to keep prices between $22 and $28 a barrel.
News of two ultra-deepwater hydrocarbon finds in the North Eastern Mediterranean Sea also helped Shell (SC: Research, Estimates), whose shares closed 1.1 percent higher.
BASF (BF: Research, Estimates) was another bright spot, up 2.2 percent after the world's top chemicals company by sales said it planned to continue a share buyback program this year with another repurchase worth up to 500 million ($637.3 million), which the firm said could begin immediately.
Across Europe, the Paris CAC 40 added on 28.73 to 3,678.07, London's FTSE 100 dipped 3.90 to 4408.10, and the Frankfurt DAX rose 13.41 to 4,070.46.
The FTSE Eurotop 300 index of pan-European blue chips ended 0.2 percent higher to around 995, still off a 17-month peak last week, when a brief spike took it through 1,000 to the highest level since August 27, 2002.
The DJ Euro Stoxx 50 index edged 0.6 percent higher to about 2,877.
Investors were cautious after weaker-than-expected U.S. trade, confidence and price data last week. They also looked to the weak dollar, which erodes the competitiveness of European exports to the United States, shrinks euro zone corporate profits and raises the prospect of higher U.S. interest rates.
"European markets remain sensitive to the slightest signal of U.S. weakness, which translates into new dollar weakness," said economist Valerie Plagnol at CIC Securities in Paris.
On Monday, the euro fell again against the dollar after European Central Bank President Jean-Claude Trichet said the euro zone was on track for recovery and inflation was slowing.
Some strategists said European company valuations and an ongoing profit recovery may tempt investors back.
Investors will be looking at the ZEW institute's investor expectations indicator for Germany and the U.S. industrial production report, both due Tuesday, hoping for fresh signs that recent equity gains were justified.
Swiss Re shares gained 2.6 percent after the world's number two property/casualty reinsurer said it would benefit from persistent demand for coverage for at least another two years. Smaller Swiss rival Converium (CHR: Research, Estimates), set to post earnings on Tuesday, rose 2.9 percent.
A source told Reuters that Cingular Wireless had raised its offer for the third-biggest U.S. mobile operator AT&T Wireless (AWE: Research, Estimates) to $38 billion, trumping a weekend bid from Vodafone thought to be worth around $35 billion.
"We believe it would be prudent and sensible for Vodafone to make its intentions known -- we would hope that it does not launch a bid," said Bear Stearns in a research note. "If it does bid, we would expect continued weakness and psychological damage to the share price."
Vodafone (VOD: Research, Estimates) shares shed 2.6 percent in London.
Autos also weighed on markets. Germany's Volkswagen fell 1.6 percent on expectations it will show a 54 percent slump in 2003 profits when it posts results this month as weak demand for its cars, a strong euro and the cost of job cuts in Brazil take their toll.
Rival DaimlerChrysler (DCX: Research, Estimates) slipped 1.4 percent after a report that Japan's Mitsubishi Motors, in which it holds a 37-percent stake, may post an operating loss of about ¥100 billion ($948 million).