The FTSE Eurofirst 300 was down by over 1 percent to 1,466.97 on Tuesday. The banking sector was instrumental in the declines as worries about the US subprime mortgage sector continued in abundance, despite analyst opinion that it would not turn out to have that much effect in the European sector.

Among investment banks, UBS (SWX: UBSN; NYSE: UBS; TYO: 8657) dropped 1.1 percent to €70.20, while Deutsche Bank (NYSE: DB) and Credit Suisse (SWX: CSGN; NYSE: CS) each fell 1.9 percent, to €96.46 and €85.75 respectively. Commerzbank (DAX: CBK) was 2.9 percent lower, not only on the general sentiment in the sector, but also due to a statement from Citigroup (NYSE: C) that it is not interested in bidding on the German bank.

In the chemicals sector, Akzo Nobel (Eurofirst: AKZ; NAS: AKZOY) added 0.8 percent to €54.11, still buoyed by news of the sale of its Organon drugs unit to US company Schering-Plough (NYSE: SGP). ING (Euronext: INGA; NYSE: ING) upgraded Akzo from “hold” to “buy” and upped its target share price to €64, citing a sale price for the company that was €3 billion dollars than market estimates.

Altadis (IBEX-35: ALT) added 1 percent to €38.20 even though it denied that UK tobacco company Imperial Tobacco (LSE: IMT) was looking for a friendly merger in order to stop an approach by Kohlberg Kravis Roberts.

The FTSE Eurofirst 300 managed to notch an 0.2 percent gain on Tuesday to close at 1,487.30 despite losses in the oil sector.

While the continuing drop in crude oil prices hurt the oil companies, the falling prices helped airlines see gains. Air France-KLM was up 0.5 percent to €34.51, while Alitalia gained 1.5 percent to €1.08 and Iberia added 1.7 percent to €2.95. Amid rumors that Lufthansa could be interested in buying SAS, the Scandinavian carrier added 6.1 percent to SKr139 and Lufthansa gained 1.5 percent to €22.35. The talk of a possible deal has been circulating since Sweden’s newly elected government said in September that they might be interested in selling its stake in SAS.

The chemicals sector was also helped by falling oil prices. BASF was 0.6 percent higher to €73.42, while Akzo Nobel added 1.4 percent to €47.96.

Share prices dropped, however, in the oil sector. Total fell 1.2 percent to €34.51, while Repsol-YPF was 1.9 percent lower to €25.47, Statoil dropped 3.2 percent to NKr153 and Cepsa was down 3.9 percent to ¥54.80.

Elsewhere, Philips Electronics added 1.8 percent to €28.51 when it said it would begin an announced share buyback on 22 January, while France Telecom gained 2.7 percent to €22.25 on an upgrade from “neutral” to “buy” from UBS.

In Europe on Tuesday, the FTSE Eurofirst 300 came back from early losses but still ended the session 0.3 percent lower to 1,425.35. The 300 was down 0.6 percent at one point on the session.

The pharmaceuticals sector was lower. Roche dropped 1.5 percent to SFr215.50 even though Bear Stears made positive comments, reaffirming its “outperform” rating and target share price of SFr280 for the Swiss drug maker. Meanwhile, Akzo Nobel was 1.7 percent lower to €41.86 after announcing that US drug company Pfizer had dropped out of a development deal with the Dutch group.

Utilities were lower as well. Finnish utility Fortum dropped 1.4 percent to €22.44 after it abandoned plans to raise electricity rates for its domestic non-commercial customers. Iberdrola issued an expected bid for Scottish Power but the offer was lower than expected, sending its shares 2.1 percent lower to €32.06. German utility RWE, up recently on bids rumors, fell 2.6 percent to €83.80.

The automobile manufacturing sector was mixed as the euro hit its highest level in almost two years in relation to the US dollar. Volkswagen and Porsche were both higher, with Porsche adding 0.3 percent to €854.55 and VW gaining 2.5 percent to €82 on rumors that Porsche was building more of a stake in VW. On the other hand, BMW and Renault each dropped 0.3 percent, to €41.72 and €91.25 respectively, while DaimlerChrysler was 0.7 percent lower to €43.96.

The FTSE Eurofirst 300 ended the week at 1,445.39 on Friday, adding 0.3 percent for the session and brining its gains since the beginning of the year to 13 percent. The day’s close was its highest since early June 2001.

Several sectors saw gains over the week. The forestry and paper sector did very well. UPM Kymmene was 6 percent higher to €19.9, while Stora Enso added 8.2 percent to €12.73 and M-Real of Finland gained 17.2 percent to €4.83 on the introduction of a restructuring plan.

Safran, the French manufacturer of jet engines, added 7.3 percent over the week to €16.84 on rumors of a merger with defense company Thales.

Spanish property group Metrovacesa was the big gainer of the week as it was up 18.4 percent to €125.1. It is now 70.2 percent higher than it was at the beginning of September on the strength of bids rumors.

Among losers this week, Nokia dropped 4.2 percent to €15.4 on disappointing quarterly results and lower prices for its phones. Software maker SAP fell 4.9 percent to €156.85, also on its quarterly report. In the semiconductors sector, ASML was 6.9 percent lower to €17.9, while Akzo Nobel was down 10.5 percent on its quarterly report and on the delay of its new anti-schizophrenia drug.

After seeing losses on Tuesday, the FTSE Eurofirst 100 added 0.9 percent on Wednesday to 1,441.48 on several bits of positive news.

Automobile manufacturer Fiat was 5.7 percent higher to €13.53 on rumors that it wants to sell its truck making division. It didn’t hurt that JPMorgan issued positive comments, saying that Fiat stands to double operating profits in the third quarter.

French jet engine manufacturer Safran also gained 5.7 percent, to €16.87, on rumors that there is a merger in the works between it and defense electronics company Thales. Thales added 1.7 percent to €36.58 on the speculation.

The forestry and paper sector saw gains when M-Real of Finland announced a major restructuring, saying that it will cut costs and cut capacity. It also announced the appointment of a new chief executive. M-Real added 14.9 on the news to €4.78. Among others in the sector, UPM Kymmene was 3.8 percent higher to €19.50, while Stora Enso advanced 5.3 percent to €12.61.

ASML, which makes semiconductor manufacturing equipment, dropped 6.6 percent to €17.75 as not all analysts were enthusiastic about its third-quarter report. ABN Amro dropped its recommendation from “hold” to “sell”, while Dresdner Kleinwort reaffirmed its “sell” recommendation. Both cited slowing orders as the cause for their disappointment. Deutsche Bank, however, reiterated its “buy” rating on ASML.

Dutch pharmaceuticals group Akzo Nobel also saw declines, falling 8.9 percent to €43.35 after it said it would delay the release of asenapine, it’s new anti-schizophrenia drug and released third-quarter results that were not up to analyst predictions.

Down early in the day, the FTSE Eurofirst 300 managed to recover to close 0.9 percent higher to 1,355.41 on a slow day when some European markets were closed for the Assumption Day holiday.

Stocks in technology sectors benefited from comments issued by Morgan Stanley. Among software companies, SAP added 2.7 percent to €143.08. STMicroelectronics was 4.1 percent higher to €12.29, while in the telecommunications equipment sector Ericsson gained 4.2 percent to SKr22.60.

The pharmaceuticals sector was up on the day. Novartis was up by 1 percent to SFr69.95 even though its Sandoz generics division could be a target of a lawsuit by Sanofi-Aventis over unauthorized manufacture of generic copies of Plavix. The gain for Novartis came on a reconfirmation of Dresdner Kleinwort’s “buy” recommendation. Sanofi was also up, adding 2.5 percent to €70.30.

Among banks, UBS was 3.4 percent higher to SFr68.30 on a second quarter report that showed a 47 percent gain in net profits, well above what had been expected.

In the chemicals sector, Akzo Nobel added 4 percent to €44.35 on the news that it will ask shareholders to approve a spinoff of its pharmaceuticals unit and to make 30 percent of the new company available on Euronext in 2007.

In Europe this week, the FTSE Eurofirst 300 was up 2 percent to 1,397.07. This four and a half year high came even though crude oil prices were up into record territory.

Finnish utility Fortum was the week’s biggest gainer, ahead of a first-quarter report, due next Tuesday, which is expected to show earnings up by 20 percent. Most of the gains came on increased prices for electricity. Fortum added 12.7 percent to €23.13.

Other double-digit gainers this week included German steel maker ThyssenKrupp and Dutch chemicals group Akzo Nobel. ThyseenKrupp was up 10.2 percent during the week to €26.83 ahead of quarterly results due May 12. UBS reiterated its “buy” recommendation and increased the steel maker’s target share price from €25 to €30. Meanwhile, Akzo Nobel advanced by 10.1 percent to €47.83 on a better than expected quarterly report.

In the telecommunications sector, Nokia added 7.1 percent on the week to €18.65 on a positive earnings report. Swedish telecom Ericsson, however, lost 9.8 percent this week to SKr26.60 on a quarterly report that showed profits flat.

German utility Eon was up 7.1 percent to €97.60 after it was announced that Eon will take a stake in Gazprom’s Siberian gas field while Gazprom will take part of Eon’s Eastern European operation.

In the banking sector, French bank Societe Generale added 3.9 percent this week to €124.10 on the announcement that it will buy Splitska Bank in Croatia.

In Europe on Thursday, the FTSE Eurofirst 300 was up 0.2 percent to 1,387.36, it’s highest close in nearly five years. Even so, it fell back substantially from the high of 1,392.85 in reached earlier in the day as mining stocks in the UK saw losses.

The telecommunications sector was mixed. Nokia added 5.6 percent to €18.40 on a first-quarter earnings and sales report that was well ahead of forecasts. However, Ericsson was down 0.4 percent to SKr28.70 ahead of its first-quarter report, due Friday.

In the semiconductor sector, STMicroelectronics was helped by Nokia’s result and added 2.6 percent to €15.60.

Dutch chemicals company Akzo Nobel gained 6 percent on the day to €46.29 after releasing a better-than-expected quarterly report and a positive outlook statement for the second quarter. Dresdner Kleinwort Wasserstein reiterated its “add” recommendation and its target share price at €46. The rest of the sector benefited from Akzo Nobel’s report. BASF was up 3.3 percent to €67.55, Bayer added 1.9 percent to €34.32, and DSM gained 1.7 percent to €36.83.

Foods group Danone added 1.3 percent to €100.70 as it reported close to a 15 percent rise in sales in the first quarter and issued a positive outlook. Even so, Sanford C. Bernstein reiterated its “underperform” rating on Danone and kept its target share price at €76. The agency did, however, say that if there was an offer for the company, its share price could rise as much as 20 percent.

German software company SAP released a slightly less positive report. While license revenues were higher than had been anticipated, operating margins were lower than expected and there was no change in its full-year guidance. As a result, SAP dropped 0.9 percent to €181.50.