EUROPE MARKETS: Europe Stocks Hold To Losses After Ukraine Cease-fire Deal

By Carla Mozee, MarketWatch

LONDON (MarketWatch) -- European stocks lost ground Friday, with investors remaining cautious after Ukrainian forces were ordered to cease fire in eastern Ukraine.

Ukrainian President Petro Poroshenko in a statement said representatives have signed an agreement to halt fighting between Ukrainian forces and pro-Russia rebels, starting at 6 p.m. Kiev time. "I hope that these agreements, including cease-fire and liberation of hostages, will be strictly observed," said Poroshenko. Russian news agency Interfax reported pro-Russia rebels also agreed to halt fire.

Poroshenko earlier Friday said he was "cautiously optimistic" about the peace talks. According to news reports, fighting had still been taking place near the port city of Mariupol in southeastern Ukraine.

Although Friday's peace talks had been anticipated, U.S. and European leaders at a North Atlantic Treaty Organization summit in Wales still discussed imposing toughen sanctions on Russia over the Ukraine crisis, and there were signs that some countries could decide to send weapons to Kiev.

Markets: The Stoxx Europe 600 fell 0.5% to 347.26, but slightly pared losses as Germany's DAX 30 index turned higher for a 0.2% gain.

The DAX 30 was on track for a 2.9% weekly advance, a fourth consecutive weekly win, after Russian President Vladimir Putin this week said steps had been in place to discuss a resolution to the conflict, though a Kremlin official stressed Russia hadn't been a party to the fighting in Ukraine. The Stoxx 600 was in line for a 1.5% weekly gain, which would also be its fourth in a row.

"Ever tougher sanctions against Russia are not good for the German economy, but this is being offset by a weaker euro, helping exporters in particular," said Mark Tinker, head of AXA Framlington for Asia, in a report. "The European equity markets have thus rallied as the euro has weakened, with emphasis on cyclicals, financials and exporters."

The euro was looking at roughly 1.3% drop for the week against the greenback, according to FactSet data. The euro slid to a near 14-month low, trading below the $1.30 level, after the European Central Bank on Thursday cut interest rates and announced a "private QE" program in an effort to fight low inflation.

The euro (EURUSD) found a bit of relief Friday, buying $1.2964 compared with $1.2944 late Thursday, as a worse-than-expected August U.S. jobs report pressured the dollar against major rivals.

Advancers on the Stoxx 600 were led by Neopost SA after the mailroom-equipment maker late reiterated its full-year view, and said it sold $90 million in new debt to a single investor.

Decliners included metals producer Fresnillo and Coca-Cola HBC , each down 3.9%.

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