Europe ends flat on tech gloom

German trader watches stocks slide

LONDON, England (Reuters) -- European shares ended flat on Friday as merger hopes in banks and builders pierced the tech gloom that followed a Nokia sales warning ahead of rival Ericsson's results on Monday.

At 1530 GMT, with only Frankfurt officially still trading, the FTSE Eurotop 300 index was flat at 1,258 points. (The German markets are set to close at 1900GMT).

The pan-European blue chip index is up 1.6 percent for the week and flat for the year, though bourses remain locked in their five-month trading range.

The quarterly earnings season speeded up in Europe and the United States this week when Europe's biggest software firm, SAP, also disappointed investors on Thursday.

The DJ Stoxx European technology index fell 2.3 percent on Friday to its weakest level since November as shares in heavyweights Nokia and Ericsson hit six-month lows.

Perlos, which supplies components to Nokia, sank 6.3 percent, its second day of heavy losses as the outlook for its key customer and the tech sector in general worried investors.

Analysts said Europe's technology sector was particularly vulnerable to any disappointment because they are more expensive than their U.S. peers.

European shares were also pressured on Friday by a retreat in oil stocks as Brent crude fell as tensions in the Middle East eased. France's TotalFinaElf shed 0.75 percent.

Europe's banks hit their best level in nine months as the sector's steady recovery continued, helped by strength in French and Italian banks.

Shares in Societe Generale and BNP Paribas both rose more than three percnet to hit new highs for the year. Societe Generale gave a bullish outlook, while BNP Paribas rose after a report which said it may sell its majority stake in a fund management unit.

Italian banks Banca di Roma and Bipop-Carire also rose sharply, by about five percent apiece, for a second straight day as the market saw progress in their proposed merger.

Europe's construction sector rose to its best level since last June as shares in Spain's Dragados builder leapt 22.7 percent on news that smaller domestic rival ACS had bought a stake in the company.

The deal was done at a hefty premium, triggering merger speculation. ACS shares fell 0.2 percent.

British builder Balfour Beatty rallied seven percent as investors bet that more schools and hospitals will be built after the UK government on Wednesday unveiled a tax increase to boost public services.

Europe's food and beverage sector was also flirting with new highs for the year as French drinks group Pernod-Ricard rose 3.2 percent to hit a new high for 2002 after Goldman Sachs raised its share price target, dealers said.

On Wall Street, the Dow Jones industrial average was up 0.3 percent at 10,235 points, while the tech-heavy Nasdaq Composite was off 0.2 percent.