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European Shares Seen Lower; Greece Worries Markets

European shares were called to open lower on Friday, ending another dismal week for equities, as investors learned that at least half of the euro zone’s member states are making contingency plans for a Greek exit from the single currenceny.

EU building flags brussels
EyesWideOpen | Getty Images
EU building flags brussels

The UK’s FTSE was called to open 13 points lower at 5337, Germany’s DAX was expected to open 27 points lower at 6289 and France’s CAC was seen opening 6 points lower at 3032.

At least half of euro zone governments as well as banks and large companies are making contingency plans in case Greece decides to leave the single currency area, even though the preferred option is still for Athens to keep the euro.

Italian Prime Minister Mario Monti speculated that Greece will remain in the euro zone, although he said it isn’t a certainty. Speaking on an Italian talk show, he added that it’s in Germany's interest to ensure no member state leaves the euro.

Elsewhere, Italian Deputy Economy Minister Vittorio Grilli said his country is ready for such a Greek exit, if Greek voters on June 17 give power to parties that reject reforms agreed to with the European Union and International Monetary Fund.

That revelation and the apparent lack of agreement among European leaderson a way out of the crisis pushed the euro to hover near two-year lows against the dollar early on Friday. The single currency was also weighed down by weak German manufacturing data, which showed the sector shrank at its fastest rate in three years, underlining that no European state is immune from the ongoing debt crisis. The euro has dropped nearly two percent this week.

European Central Bank policymaker Joerg Asmussen tried to reassure investors, saying on Thursday that the ECB’s strong preference is for Greece to stay in the euro zone. He added that this was the bank's "Plan A," and he would not speculate on any possible "Plan B."

"On Greece, I can simply state that it's our strong preference at the ECB that Greece stays within the euro area," Asmussen told a financial conference in Poland.

In Greece itself, the anti-bailout, leftist Syriza party is maintaining its poll lead ahead of the Greek election, a poll showed on Thursday. The Public Issue/Skai TV poll showed Syriza leading with 30 percent of the vote, four points ahead of the conservative New Democracy party, which is backing the bailout. The Socialist PASOK, which also backs the bailout, gained slightly at third place with 15.5 percent, Public Issue said.

Meanwhile, troubled Spanish lender Bankia will ask the state to bail it out for more than 15 billion euros ($19 billion) when its new management team presents a restructuring plan on Friday, a financial sector source told Reuters on Thursday. Neither Bankia nor the government would comment on the matter.

Away from the euro zone, claims by four of Wall Street's main market makers against Nasdaq over Facebook's botched IPO are likely to exceed $100 million, as they and other traders continue to deal with thousands of problems with customer orders.

Four of the top market makers in the Facebook IPO—Knight Capital, Citadel Securities, UBS and Citi's Automated Trading Desk—collectively have probably lost more than $100 million from problems arising from the deal, a senior executive at one of the firms told Reuters.

Oil prices rose on Thursday, rebounding from the previous session's slump as investors fretted about potential disruptions to Middle East oil supplies. Talks between world powers and Iran over its nuclear program ended with no agreement.

After seeming conciliatory before the Baghdad talks, Iran insisted on its right to nuclear fuel enrichment. Another meeting is set for June, suggesting the situation is fluid, and prompting caution by oil investors. Trading volume was light and prices remained substantially below their highs for the year.

Japan's core consumer prices rose 0.2 percent in April from a year earlier, Internal Affairs ministry data showed on Friday, marking the third straight month of increases but still far from the central bank's 1 percent inflation target.

Asian shares inched higher on Friday, helped by a slight uptick in U.S. shares overnight that encouraged investors to return cautiously to buy up bargains. Japan's Nikkei and Australia's S&P ASX 200 were both flat. Korea's Kospi gained 0.5 percent.