Greek banks sharply higher after ECB collateral plan
By Sarah Turner, MarketWatch
LONDON (MarketWatch) -- European shares backed away from annual highs on Friday, as investors mulled details of Europe's plan to support Greece, although Greek banks surged.
The Stoxx Europe 600 index (ST:SXXP 263.86, -0.93, -0.35%) declined 0.5% to 263.65 after three straight sessions of gains pushed the index to a closing level not seen since Sep. 26, 2008 on Thursday.
Late the previous day, European leaders said that they would support a financial aid mechanism for Greece, if required, which will involve the International Monetary Fund. Read story on aid plan.
Greek stocks were up on Friday, with the ASE Composite index (XX:??? 2,063, +15.91, +0.78%) up 0.4% at 2,070.22.
Investors were taking their first chance to react to the support plan as well as an extension of looser European Central Bank collateral criteria into 2011, also announced Thursday. Read more on ECB collateral plans.
The collateral news helped the banking sector in Greece and Alpha Bank shares were up 9.5% and National Bank of Greece (NBG 4.09, +0.09, +2.25%) shares were up 8.1%.
The euro climbed 0.8% to $1.3370 against the dollar after the rescue plan but some strategists were sceptical that gains will continue. Read more on currencies.
"This will not end the strains in the single currency area given the continued fiscal difficulties faced by other member states," said Ian Williams, strategist at Altium Securities.
The finances of Portugal, Spain, Italy and Ireland have been under particular scrutiny due to relatively large fiscal deficits and notable decliners on Friday included Allied Irish Banks (IE:AIB 1.72, -0.07, -3.91%) , down 4.5%, and Bank of Ireland (IE:BIR 1.42, -0.05, -3.27%) , down 1.7%.
On a regional level, the U.K. FTSE 100 index (UK:UKX 5,719, -9.13, -0.16%) lost 0.2% to 5,716.07, the German DAX index (DX:DAX 6,121, -11.67, -0.19%) lost 0.2% to 6,118.62 and the French CAC-40 index (FR:PX1 3,997, -3.83, -0.10%) declined 0.2% to 3,991.74.
Asian shares were higher and U.S. stock futures were pointing to a higher open on Wall Street.
Shares of Swedish telecoms-equipment firm Ericsson (SE:ERICB 74.80, -0.40, -0.53%) (ERIC 10.09, -0.22, -2.13%) declined 1.4%.
The firm was downgraded to sell from hold at Deutsche Bank, which said consensus expectations of a late-cycle recovery are unfounded.
Separately, J.P. Morgan started the firm's American depositary receipts at underweight.
