LONDON, Feb 22 (Reuters) European stocks were treading water by mid-session on Wednesday, as an upbeat batch of corporate results and a continued push by utilities helped offset a lacklustre performance from technology and oil stocks.
Heineken topped gainers as investors cheered its earnings rise, while improved results and the promise of a .5 billion capital return boosted Anglo-American shares.
''Valuations, I don't think are that expensive considering the low interest rate environment,'' said Victor Polak, portfolio manager at Citigroup's wealth advisory division.
''Is the market cheap? Probably not, but can you make money? Probably, and will we be higher at the end of the year? As a betting man, I'd say we'd see it higher than we are now.'' By 1140 GMT (1710 IST), the benchmark FTSEurofirst index of the leading 300 European stocks was down 0.1 per cent at 1,349.12 after reaching a 4-1/2 year high in the previous session.
A dip in Asian and Wall Street shares, where interest rates worries nagged after the latest Federal Reserve minutes, kept the pressure on European stocks.
''We're holding on. There's a lot of cash floating around, there are deals happening all the time,'' said Will Armitage at IG Index.
''It's always tough to pick the top of the market.'' Utilities ranked as the biggest sector gainer, adding 1 percent as merger and acquisition speculation continued to grip the sector.
Suez led utilities higher with a 3.8 per cent gain, after Enel said its plan to take a stake in Electrabel does not exclude a possible bid for parent Suez.
Electrabel gained 0.5 per cent and Enel rose 1.8 per cent.
Elsewhere, Spanish takeover target Endesa added 1.1 per cent, after newspapers reported the country's prime minister opposed a 29.1 billion euro cash bid from Germany's E.ON.
Heineken added 3.6 per cent after the brewer reported a better-than-expected 2005 profit before charges, while Anglo American added 1.5 per cent, posting a 39 per cent earnings rise and saying it was increasing its capital return to .5 billion.
Among other resource stocks, Rio Tinto tumbled 3 per cent as its shares went ex-dividend, pulling the basic resource index down 0.6 per cent.
Oil stocks dropped, with BP down 1.7 per cent and Total trading 0.7 per cent lower as crude oil prices eased back to just over a barrel.
TECH STOCKS SLIP Technology stocks dropped, with Infineon down 1.9 per cent and ASML down 2.3 per cent after chip stocks dropped in the U.S. and Asia.
Elsewhere, shares in German telecoms giant Deutsche Telekom dropped 1.3 per cent on market talk it may cut its dividend. Some dealers said the stock is also being held back by speculation that a large share placing is imminent.
German forklifts and industrial gases group Linde rose 1.2 per cent after it beat analyst' estimates with an 18 per cent rise in 2005 core profit and said it would increase its dividend.
Investors will be paying close attention to U.S. consumer price data due for release at 1330 GMT (1900 IST) in the hope of gleaning indications of the Fed's next move.
REUTERS SD HS1822