By Sara Sjolin
Spanish stocks rallied Friday on speculation the country may ask
for European aid over the weekend, while the broader European stock
market closed lower as resource firms and banks weighed.
The Stoxx Europe 600 index closed 0.3% lower at 241.93, breaking
a three-day winning streak. The index, however, ended the week 2.9%
higher, its best weekly performance since early February.
"This week was all about hope, but unfortunately hope doesn't
contain a strategy. The markets wanted to see some policy action
first from the ECB and then from Bernanke and they didn't get it,"
said Steen Jakobsen, chief economist at Saxo Bank.
Spain was again in the limelight after Fitch Ratings late
Thursday downgraded the country's credit rating to BBB from A, with
a negative outlook. The BBB credit rating is just two notches
higher than junk status.
However, Spanish stocks erased losses after Reuters reported
that the country may turn to the EU for help to deal with its
ailing banking sector as soon as Saturday, citing two senior EU
officials and a German official.
Spain's Deputy Prime Minister Soraya Saenz de Santamaria said
there were no plans to take any decisions on aid before the
conclusion from various reports on the country's banking sector
were known.
The first report is due Monday, when the International Monetary
Fund releases an audit of Spanish banks.
A representative from the European Commission's office said it
wasn't aware of any fresh Spain request for aid.
The IBEX 35 index jumped 1.8% to 6,552.00. Telefonica SA
supported the index, up 3.7%, while Bankinter SA rose 3.2% and
Banco Santander SA took on 1.4%.
"I think Spain is almost in a desperate situation. What Spain
needs to do is to take a blank piece of paper and figure out how to
stay competitive, they need to privatize a lot of the companies and
need to look at recapitalizing the banking system," Jakobsen
said.
"Spain needs to be friendly to business and focus on creating
jobs. The only way they can move forward is by creating a credible
and competitive market plan," he added, and stressed that the
problems are for Spain to figure out and not the rest of the
European Union.
Comments from Barack Obama about the economy and the European
crisis helped the broader stock market trim losses in late action
and further pushed U.S. stocks into positive territory. The
president urged Europe's leaders to help the troubled banking
sector and warned Greece not to leave the currency union.
Elsewhere, miners and oil firms weighed on markets as oil prices
tumbled and most metals prices were off. Among U.K. miners, Vedanta
Resources PLC slipped 5.1%, Rio Tinto PLC fell 4.8% and BHP
Billiton PLC declined 2.9%.
Oil group BP PLC lost 1.1% and BG Group PLC shed 0.9%.
The FTSE 100 index lost 0.2% to 5,435.08, with banks further
adding pressure. Heavyweight HSBC Holdings PLC slid 0.7%, while
Barclays PLC lost 1.3%. U.K. stocks were 3.3% higher for the
week.
Banks were also on the decline in Germany. Commerzbank AG
dropped 3.1%, while Deutsche Bank AG gave up 0.5%. The DAX 30 index
lost 0.2% to 6,130.82, but was up 1.3% for the week.
Data showed German exports slid 1.7% in April month-on-month,
the first decline in exports this year, signaling less demand for
the country's product and a dampening of economic growth. Exports
to the euro zone alone dropped 3.6% on a yearly basis. Imports also
fell for the first time this year, down 4.8% on a monthly
basis.
French stocks were also lower, with the CAC 40 index trading
down 0.6% at 3,051.69. On a weekly basis, the index climbed 3.4%.
Societe Generale SA gave up 1.2% and BNP Paribas slipped 1.9%.
Auto makers were off, with Peugeot SA declining 3.2% and Renault
SA down 2.3%.
Elsewhere, heavyweight insulin maker Novo Nordisk AS slid 2.6%
as the U.S. Food and Drug Administration delayed the approval of
two new insulin drugs by three months.
-By Sara Sjolin; 415-439-6400; AskNewswires@dowjones.com