Europe Economy

European Stocks to Open Lower; Focus on Banks

European stocks were set for a lower open Friday, after ending the previous session down on lingering worries about the euro zone's debt problems.

The FTSEwas indicated to open 16 points lower, the DAX was set to lose 25 points while the CAC-40was seen down 10 points, according to data from IG Markets.

Banks will be in focus as the results of Europe-wide stress tests will be released after the bell, at 5 pm London time.

The tests were carried out on 91 banks which will have to show they can keep a core Tier 1 capital ration of minimum 5 percent in case various market shocks hit them.

The results will include clear disclosure of credit and sovereign debt exposures, the European Banking Authority said.

It said it expected Banks will have to show they can maintain a core capital ratio of at least 5 percent to pass a test based on a mix of theoretical market shocks.

The EBA said the results will include clear disclosure of credit and sovereign debt exposures, something investors and analysts have said was not clearly stated in stress tests in previous years.

The stress tests will be a missed opportunity for Europe's policymakers unless they come down heavily on undercapitalized banks, analysts told CNBC.com.

In merger and acquisition news, BHP Billiton unveiled an agreed takeover of US gas producer Petrohawk Energy in a deal worth $12.1 billion.

On the economic front, data for the European Union's foreign trade will be released at 10 am London time.

In the US, Citigroup will report results at noon London time, after JPMorgan'sprofit beat analyst expectations on Thursday.