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Europe Shares Seen Lower; Spanish Bank Bailout Eyed

European shares were called lower on Friday tracking Asian markets overnight after corporate earnings in the U.S. proved a mixed bag and investors waited for euro zone finance ministers to approve an agreement to lend up to 100 billion euros ($122.5 billion) to Spain so it can recapitalize its banks.

Spain
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Spain

The FTSE was expected to open 10 points lower at 5704, the DAX was seen opening lower by 9 points at 6749 and the CAC 40 was called to open down 6 points at 3258.

Asian shares gave back some gains from the previous session but were still poised for their biggest weekly gain since January as mostly positive earnings new from the U.S. helped buoy investment sentiment.

The S&P 500 hit a 2-1/2 month high on Thursday, although a firm yen kept Japanese shares on the back foot and further tensions in the Middle East at one point pushed oil prices to an eight week high overnight over supply concerns, before they later eased.

Ministers are expected to sign off on a lengthy memorandum of understandingwith Spain spelling out the terms of the aid, which will be fully distributed by the end of 2013.

German chancellor Angela Merkel easily won parliamentary approvalfor Germany's country’s contribution to the Spanish rescue package on Thursday despite growing unease in her center-right coalition about the rising cost of Europe's debt crisis for German taxpayers.

After the vote Germany's finance ministry warned the euro zone’s largest economy was likely to have seen a slowdown in growth in the second quarter, in its monthly report.

The warning was the first sign Germany’s economy may not be immune to the debt crisis. Growth will probably remain moderate for the rest of the year, the ministry said.

The London Stock Exchange(LSE) is in talks with the Singapore Exchangeabout a potential 7.2 billion-pound ($11.3 billion) merger, according to a report in the Daily Telegraph, in a deal likely to face tough regulatory scrutiny.

The deal would likely take the form of a takeover of the LSE by the larger Singapore Exchange.

And as the London Interbank Offered Rate (Libor) scandal rolls on, some of the banks being investigated in the rigging scandal are looking to pursue a group settlement with regulators rather than face a Barclays -style backlash by going it alone, people familiar with the plans told Reuters.

Discussions are thought to be at a preliminary stage, and it is unclear if regulators will agree to the proposal, none of the banks under investigation want to be next in the firing line for lawmakers after the hostile treatment of Barclays over the last fortnight, a source told the news agency.

The banks currently being investigated all refused to comment.

Contact Europe: Economy

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