European shares were little changed on Monday as a rise in pharma stocks offset weaker insurers, which were dragged down by ING (ING.AS), which fell after announcing its plan to split the company.
Investors' appetite for risky assets such as equities diminished, with the VDAX-NEW volatility index .V1XI rising 4 percent. The higher the index, which is based on sell and buy options on Frankfurt's top-30 stocks <0#.GDAXI>, the lower the desire to buy risky assets.
The FTSEurofirst 300 .FTEU3 index of top European shares was up 0.05 percent at 1,009.32 points by 1213 GMT, after falling in the previous two sessions.
The index, which slumped 45 percent last year, is up 21 percent in 2009 and has surged 56 percent since hitting a record low in March this year.
Insurers lost ground, with the DJ STOXX sector index .SXIP falling 1.6 percent after Dutch bancassurer ING Group NV (ING.AS) said it will split the company in two, shrinking itself into a smaller Europe-focused bank.
The company also said it would pay back 50 percent of its aid from the Dutch state early and launch a 7.5 billion euro ($11.25 billion) rights issue.
ING shed 9.4 percent, while Aegon (AEGN.AS), Swiss Life (SLHN.VX), Legal & General (LGEN.L), Prudential (PRU.L) and Aviva (AV.L) fell 0.6 to 3.9 percent.
As we enter another week, we are getting as many questions as answers related to the health of the global economy, said John Murphy, analyst at ODL Securities.
Whilst corporate results are looking pretty good in terms of headline figures, one can't escape from the underlying feeling of nervousness.
The GfK market research group said German consumer sentiment declined for the first time in just over a year going into November, weighed down by lower income expectations and a diminished willingness to buy.
Financial shares also declined after European Central Bank Governing Council member Christian Noyer warned that banks are taking the same risks that led to the financial crisis, and said they should preserve capital rather than pay it out to bankers and investors. [ID:nSIN525641]
HSBC (HSBA.L), Barclays (BARC.L), Lloyds (LLOY.L), Royal Bank of Scotland (RBS.L), BNP Paribas (BNPP.PA), Credit Agricole (CAGR.PA) and Natixis (CNAT.PA) fell 0.6 to 4.2 percent.
Britain's Financial Services Authority said that major UK banks have agreed to implement a new code for financial reporting aimed at addressing questions on disclosure raised in the aftermath of the credit crisis.
PHARMA STOCKS GAINS, MINERS UP
Drugmakers, generally seen as defensive plays, were in demand. AstraZeneca (AZN.L), GlaxoSmithKline (GSK.L), Novo Nordisk (NOVOb.CO), Roche Holding (ROG.VX) and Shire (SHP.L) rose between 0.2 percent and 2.4 percent.
But Merck KGaA (MRCG.DE) fell 2.3 percent after it said that 2009 outlook fell short of market expectations as the drugs-to-chemicals hybrid remained wary about prospects for its main prescription drugs business.
Miners got strength from higher metals prices, with copper MCU3 hitting a 13-month high on data showing hefty imports of the metal into China and as the dollar's slid to a 14-month low following a Chinese report saying Beijing should increase its holdings of euros and yen.
A weaker dollar makes commodities cheaper for holders of other currencies and boosts demand.
Global miner BHP Billiton (BLT.L), Anglo American (AAL.L), Antofagasta (ANTO.L), and Rio Tinto (RIO.L) rose 0.3-0.4 percent.
We are in a wait-and-see mode. We are waiting for important economic figures this week and corporate news, said Philippe Gijsels, senior equity strategist at Fortis Bank.
U.S. GDP figures are very important this week as it may mark the official end of the recession. That is something which people are looking for, he added.
Electrolux AB (ELUXb.ST), the world's second-biggest home appliances maker, jumped 7.8 percent after it doubled operating profit in the third quarter as fatter margins more than made up for weak retail markets.
Across Europe, Britain's FTSE 100 index .FTSE, Germany's DAX .GDAXIand France's CAC 40 .FCHI rose 0.2-0.4 percent.