By Simon Kennedy, MarketWatch
LONDON (MarketWatch) -- European stock markets erased early losses and traded mostly higher Wednesday amid relief over a successful Portuguese debt auction, although bank stocks remained weak.
The Stoxx Europe 600 index (ST:SXXP 261.78, +2.02, +0.78%) rose 0.5% to 260.98.
Among the main regional indexes, the U.K. FTSE 100 index (UK:UKX 5,418, +10.37, +0.19%) was flat at 5,407.23, and the French CAC 40 index (FR:PX1 3,664, +20.44, +0.56%) rose 0.3% to 3,653.87.
The German DAX 30 index (DX:DAX 6,139, +21.29, +0.35%) added 0.2% to 6,129.34.
U.S. stock-market futures also pointed to modest gains on Wall Street.
Banks stocks were again weak in Europe, following sharp losses in the previous session, as worries over exposure to sovereign debt in peripheral European markets have come back into focus.
Portugal successfully completed a bond auction Wednesday, helping to alleviate some of those worries, but other European markets remained a concern.
"European peripheral debt is the key issue at the moment, with Irish spreads widening out again today," said Stephen Taylor, a strategist at Dolmen Stockbrokers.
Additional worries about Ireland have in part been sparked by the rising cost of bailing out Anglo Irish Bank, Taylor said.
He noted that those fears have pushed Irish government bond yields to record levels.
Shares in Bank of Ireland (IE:BIR 0.69, -0.03, -4.17%) (IRE 3.59, -0.14, -3.75%) dropped 7.6%, and Allied Irish Bank (IE:AIB 0.76, +0.00, +0.13%) fell 3.6%.
The benchmark Irish ISEQ index slipped about 1% to 2,753.83.
Greece was also in focus after the National Bank of Greece said late Tuesday that it will raise 2.8 billion euros of fresh capital. Shares of the bank were down 6.6% in Athens.
Among other lenders, Barclays (UK:BARC 307.35, -6.65, -2.12%) (BCS 18.95, -0.18, -0.94%) dropped 3.3% in London, extending losses from the previous session when it named Robert Diamond as its next chief executive.
The appointment has reportedly been criticized by government Business Secretary Vince Cable as a sign of "casino banking," while the bank was also hit by a downgrade from Bernstein Research.
Shares of Credit Agricole (FR:ACA 10.40, -0.23, -2.11%) declined 2.8% in Paris. The bank has been battling losses from its stake in Greece's Emporiki bank.
Utilities stocks were mostly higher, with Electricite de France (FR:EDF 33.03, +0.20, +0.59%) up 0.8% after announcing late Tuesday that its board of directors has approved the sale of its U.K. electricity-distribution networks to Cheung Kong Infrastructure.
The deal, first announced in July, should reduce net debt by 6.8 billion euros ($8.6 billion), the company said.
Also in Paris, shares of GDF Suez (FR:GSZ 26.67, +0.39, +1.46%) were up 1.6%.
Shares of U.K. mobile-telecom giant Vodafone Group (UK:VOD 159.55, -0.35, -0.22%) (VOD 24.67, +0.21, +0.86%) slipped 0.5% in London after the company said it will sell its entire 3.2% stake in China Mobile (CHL 50.25, -1.17, -2.27%) for around 4.3 billion pounds ($6.6 billion).
The company is selling the shares through an accelerated bookbuild and will return 70% of the net proceeds to shareholders through a buyback.
While Vodafone shares fell after the announcement, most other European telecoms stocks were higher. Fastweb (IT:FWB 17.91, +4.48, +33.36%) surged 33% in Milan after parent Swisscom (CH:SCMN 397.30, -0.40, -0.10%) offered to buy the outstanding shares in the firm and delist the business.
Also in Milan, Telecom Italia (IT:TME 0.21, +0.01, +4.54%) jumped 5.7%. BT Group (UK:BT.A 139.70, +1.10, +0.79%) added 1% in London.
Among smaller companies, U.K. house builder Barratt Developments (UK:BDEV 99.65, -4.65, -4.46%) tumbled 4.5% in London after it reported a smaller loss for the year, but said the outlook for new housing in the country remains challenging.
