Europe Shares Finish Narrowly Mixed; Cyprus Says Close to Bailout Deal
European shares ended mixed in choppy trading Friday as Cyprus scrambled to avoid a meltdown of its banking system and a possible exit from the euro.
The FTSEurofirst 300 Index closed down 0.57 of a point, or 0.1 percent at 1,190.15, while the euro zone blue chip index was flat at 2,684.11, although all major European indexes ended the week in negative territory.
"It has been a bumpy week but indices are still absorbing bad news relatively easily," Dominic Hawker, analyst at Messels, said.
An announcement late on Friday by the deputy leader of Cyprus's ruling Democratic Rally party that a solution to the island's bailout crisis within the framework set down by the European Union may be possible within "the next few hours," helped stabilize indexes.
"There is cautious optimism that in the next few hours we may be able to reach an agreed platform so parliament can approve these specific measures which will be consistent with the approach, the framework and the targets agreed at the last Eurogroup," deputy leader of Cyprus's Democratic Rally party Averof Neophytou told reporters.
Bank of America Merrill Lynch remained optimistic a deal for Cyprus would be reached and expected the Euro STOXX 50 to rebound back towards 2,750 points once a deal is reached, but skepticism remained among some investors.
"The cynic in me says the market is building itself up for disappointment, as any potential deal would then have to be approved by troika," a London-based trader said.
Cyprus needs to find 5.8 billion euros ($7.50 billion) in new money by a Monday deadline to clinch a European Union bailout, having earlier rejected a plan to raise the funds by taxing bank customers' deposits. If it cannot do so, it risks a collapse of its financial system that could push it out of the euro zone.
Earlier, the influential Ifo survey on German showed business confidence alarmed investors. It declined to 106.7 in March from 107.4 in February. The slump was the first decline in five months and was below economists' forecasts of 107.6.
Investors are also keeping an eye on Italy, where President Giorgio Napolitano is expected to announce his decision on the next steps towards forming a new Italian government on Friday, following two days of consultations with the country's main political leaders.
Beppe Grillo, head of the "Five Star Movement" which won 25 percent of the vote in February's elections, on Thursday asked Napolitano to give his party a mandate to govern.
BP and Rosneft announced they completed a A $55 billion deal on Thursday. The deal, the biggest ever in the oil industry, was followed by BP announcing an $8 billion share buyback scheme on Friday; shares in the London-listed firm climbed 2.06 percent.
A number of upgrades from banks such as Goldman Sachs and JPMorgan helped shares in Brenntag on Friday; shares rose 2.25 percent.
Shares in online gambling firm 888 Holdings received a boost after it was granted a licence to operate its online betting products in Nevada; its stock rose 2.15 percent.