Strong oil prices have helped Shell to a 46% jump in earnings, enabling it to post the biggest quarterly profit by a European company this year.

During the last three months of 2002, the Anglo-Dutch firm made a net profit of $2.8bn (£1.7bn), or $9.2bn for the year as a whole.

But the company warned that continued prosperity was far from secure.

"The economic climate for our business remains uncertain and we expect continued volatility," said chairman Phil Watts.

On the downside

Investors, too, were moderately disappointed by the news.

Ignoring the overall profit figure, they focused on the fact that Shell missed a key internal target for its rate of return on capital - a measure of how efficiently the firm is using its money.

Shares in Royal Dutch, one of the two main vehicles by which the company is listed on world stock exchanges, closed down 18.5p, or 4.9%, at 360p.

And while high crude prices have given Shell's exploration activities a boost, it is faring less well on the downstream - or refining and marketing - side.

Refining margins - the amount by which the price of oil products such as petrol and diesel exceeds that of the crude used to make them - are at their lowest level in a decade and show no signs of recovery, the firm said.