EUROPE MARKETS: European Stocks Cling To 11-month High As Bank Shares Take A Breather

By Carla Mozee, MarketWatch

Fyffes shares shoot up after Sumitomo bid

Stocks across Europe held to thin gains Friday, as bank shares pulled back from a rally spurred by the European Central Bank's decision to continue its stimulus efforts.

The Stoxx Europe 600 index was up 0.2% at 352.76, but losses were seen among financial , utility and industrial shares.

On Thursday, the pan-European benchmark leapt 1.2% (http://www.marketwatch.com/story/european-stocks-edge-higher-as-ecb-decision-looms-2016-12-08) to an 11-month high, for its fourth win in a row. For the week, the Stoxx 600 looks set to pile on 4%, which would mark its best weekly performance since mid-February.

Banks fall back: Within the financial sector, bank shares were under pressure, pulling the Stoxx Europe 600 Bank Index down by 0.7%.

Among the biggest decliners, Italy's Banca Popolare di Milano (PMI.MI) fell 3%, and Banco Popolare Societa Cooperativa (BP.MI) lost 2.7%. Spain's Bankia SA (BKIA.MC) was 2.9% lower, and Deutsche Bank AG (DBK.XE) shed 1.3%.

The bank sector rose Thursday after the ECB said it will continue to buy government bonds within the eurozone through December 2017, but scaled back the purchase amount to EUR60 billion a month, starting in April. The ECB currently buys EUR80 billion in bonds a month.

"The outlook for the eurozone remains weak, as underlined by the expansion of the scale of the QE program, and the fact that we've seen the end-date pushed out to December 2017," said Tony Cross, market analyst at TopTradr, in a note.

The Stoxx Europe 600 Bank Index is on track early Friday for a weekly surge of 9%.

German exporters: Germany's exporter-heavy DAX 30 equity index was pushed to its highest this year on Thursday, above 11,000. The index on Friday was off 0.1% at 11,167.22.

German stocks benefitted from a slide in the euro after the ECB decision. On Friday, the shared currency was buying $1.0617, compared with $1.0602 late Thursday in New York.

For the euro, it's "really a case of waiting for next week's [Federal Reserve] verdict now and although we're still some considerable way from parity ... if Janet Yellen paints a hawkish picture for 2017 then further losses here should be anticipated," Cross wrote.

U.S. Federal Reserve policy makers, including Chairwoman Janet Yellen, will meet December 13 to 14.

Movers: Electrolux AB shares (ELUXY) rose 3% after the appliance maker said it expects moderate growth in its largest markets (http://www.marketwatch.com/story/electrolux-warns-on-drop-in-latin-american-demand-2016-12-09)of Europe and North America next year. But it also warned that continued economic pressures in Latin America will see demand there fall by around 5%.

Gemalto NV shares (GTO.AE) climbed 6.7%. The digital security firm is buying 3M Co.'s (MMM) identity-management business for $850 million (http://www.marketwatch.com/story/gemalto-to-buy-3ms-id-management-business-2016-12-09), 3M said Thursday.

Off the main index, shares of Fyffes PLC (FQ3.DB) rallied 49% after Dublin-based banana distributor said it's being purchased by Japan's Sumitomo Corp. (8053.TO) for EUR751.4 million.

   Indexes:  Italy's FTSE MIB index   fell 1.1%, but was on track for a nearly 7% jump for the week. 

The gains came after Italian bank shares rose on the prospect that a rescue plan is being crafted for troubled lenders. The FTSE Italia All-Share Bank Index was down 2.8% Friday, but was on course for a 12% weekly climb.

Italian assets have been in focus this week after voters rejected Prime Minister Matteo Renzi's plans for constitutional reform. Renzi submitted his resignation after the defeat, but has been asked to stay on in a caretaker role, media reports said.

France's CAC 40 rose 0.1% to 4,741.67, and Spain's IBEX 35 shed 0.4% at 9,106.80. The U.K.'s FTSE 100 picked up 0.1% at 6,939.80.

(END) Dow Jones Newswires

December 09, 2016 05:13 ET (10:13 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.