LONDON (CNN) - Europe's bourses were mixed at the close on Monday, with rises in banking and oil stocks offsetting falls in drugs and chemicals.
"With interest rates on their way down (in the U.S. and the euro zone), large parts of the financial sector are a good bet," Jason James at HSBC said.
French bank Societe Generale (PGLE) rose 1.4 percent while rival Credit Lyonnais (PCL) gained just over 1 percent.
In Frankfurt, Deutsche Bank (FDBK) eased up slightly amid gloomy predictions for the Germany economy, rising 0.1 percent higher, while Britain's largest bank, HSBC (HSBA), ended 0.9 percent higher in London.
Oil prices also rose amid news U.S. military forces in the Gulf have been put on their highest state of alert against terrorist threats and expectations OPEC will decide against increasing supplies at a meeting next week.
British Petroleum (BP-) rose 1 percent in London and in Paris, Total FinaElf (PFP) was up 1.5 percent. Royal Dutch Shell was 0.7 percent higher in Amsterdam.
London's FTSE 100 ended virtually flat, off just 0.07 percent at 5,661.6, with the world's biggest advertising company, WPP (WPP), jumping 3.3 percent to lead the gainers for much of the session as it said its merger with Young & Rubicam helped push revenues up 69 percent.
UK business software company Sage (SGE) rose 2.2 and rival Misys (MSY) eased off earlier highs to end up 0.6, on news it had bought U.S. company Sunquest Information Systems for $400 million, extending its reach in the health-care information technology sector.
But UK media heavyweights suffered on continuing concerns of a slowdown in TV advertising spending. British Sky Broadcasting (BSY) and Carlton Communications (CCM) led the losers, dropping 4.5 percent with Granada (GAA) on their tails, down 4.4 percent.
Frankfurt's Xetra Dax index dropped 0.5 percent to 5,910.5. A downbeat report on Europe's largest economy from the Ifo economic institute last week has cast a shadow over the prospects for corporate profit growth.
Chemical stocks continued their weak performance in Germany after BASF (FBAS) issued a profit warning. BASF, Europe's biggest chemicals company, fell 0.6 percent and rival Bayer (FBAY) lost 0.2 percent.
Pharmaceuticals came under increased pressure after U.S. drugs maker Merck & Co (MRK: Research, Estimates) last week warned quarterly and full-year profits would miss targets.
In London, GlaxoSmithKline (GSK), Europe's biggest drugs company, lost 0.7 percent and rival AstraZeneca (AZN) was down 0.2 percent, while Schering (FSCH), one of the world's top producers of birth control pills, topped the losers in Frankfurt, slipping 3.1. percent.
"Merck is having some impact," HSBC's James told CNN. "But pharmaceutical stocks are expensive at the present moment, probably more so than at the time of the Asian crisis (in 1998)."
Drug stocks are seen as a safe haven in times of crisis and recession because of their strong earnings power.
In Paris, the CAC 40 blue chip index was up 0.6 percent at 5,213.46, led by shipbuilder Alstom (PALS). AXA (PCS), the world's biggest insurer, was up 0.9 percent.
Europe's fourth-largest telecom equipment maker, Alcatel (PCGE), fell 2.6 percent, information technology consultant Cap Gemini Ernst & Young (PCAP) dipped 3 percent, while consumer electronics company Thomson Multimedia (PHO) fell 2.7 percent.
In Amsterdam, the AEX index rose 0.4 percent, with Dutch telecom operator KPN up 3.9 percent after is quashed speculation that it would issue stock to get it out of its debt crisis.
The SMI in Zurich was 1.2 percent lower and Milan's MIB30 index rose 1.1 percent.
The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, ended flat, with the oil and gas sector rising 0.7 percent.
Investors nibbled at technology stocks in mid-morning U.S. trading on Monday, with modest bets being placed ahead of the Federal Reserve's meeting on interest rates.
The Federal Open Market Committee, the Federal Reserve's monetary policy-making arm, is expected to cut interest rates for the sixth time this year when it ends a two-day meeting Wednesday.
The Dow Jones industrial average advanced 16.03 points to 10,620.62. The Nasdaq composite index gained 23.59 points to 2,058.43 while the S&P 500 rose 4.39 to 1,229.74.
In the currency market, the euro strengthened against the U.S. dollar, fetching 86.17 U.S. cents, compared with 85.71 cents in late New York trading on Friday. 
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