17 April 2010 - Global Markets Review

Good Morning Ladies & Gentlemen,

Volcanic ash; the largest investment bank in the world accused of fraud and the first ever live television debate between two warring 'potential' UK Prime-Ministers-in-waiting.

Add to this late on Friday Morgan Stanley warning that Germany could withdraw from the Eurozone as the fallout from the Greek debt bailout continues; pretty heady stuff Ladies & Gentlemen.

I guess to start with, I need to explain a little more about where Europe is in relation to Greece at the moment and how what happens in Greece is providing a 'blueprint' potentially for Portugal.

It might appear 'all Greek to me' but this week has seen Portugal get an early warning to enable it to stave off the same problems that Greece has recently encountered.

The European Commission said in a report released Wednesday that Portugal may need to enforce additional budget cuts this year to achieve its deficit-reduction target, warning that the country's economic growth and government revenues for the year could turn out to be lower than expected.

"Achieving the ambitious fiscal consolidation path may require efforts beyond those outlined in the programme," the European Union's executive warned in the report released Tuesday.

"First, the outlined revenue performance and expenditure containment may be difficult to attain on the basis of the announced measures, already in 2010," the report said. "There is the risk that a lower-than-assumed GDP growth would dampen revenue growth and jeopardize the fall in the expenditure-to-GDP ratio."

Separately, EU Economy Commissioner Olli Rehn said while addressing a press conference in Brussels that Portugal may have to take additional cost-cutting measures this year to reduce its budget deficit if economic conditions worsened.

"The Portuguese stability programme is ambitious and complete for the years 2011 to 2013, but additional measures may be needed, especially for this year, if risks to the macroeconomic and fiscal developments materialize," Commissioner Rehn said.

Portugal's budget deficit widened sharply from 2.8% in 2008 to 9.3% last year, mainly because of heavy government spending aimed at stimulating the country's economy. The European Union has given Portugal until 2013 to bring the country's budget deficit to the permitted level, as all EU member states are required to keep their budget deficits to 3% of GDP or under.

The European Commission's report comes a month after Portugal's parliament approved a budget proposal presented by the minority socialist government for the year 2010, endorsing the austerity measures proposed in the budget to bring down the country's massive deficit.

Despite the passing of the austerity budget, credit ratings agency Fitch downgraded Portugal's credit rating from AA to AA- over concerns regarding the EU-member country's high levels of debt.

The austerity measures proposed in the budget are aimed at bringing down the country's massive budget deficit to the 3% limit permitted for countries in the European Union. The measures proposed in the 2010 budget are expected to reduce Portugal's budget deficit from the 9.3% of GDP in 2009 to 8.3% of GDP this year.

The parliamentary approval of the budget came amidst concerns that that Portugal could run into the same trouble as Greece, which is currently staggering under a €300-billion debt and a budget deficit of more than 12% of national output last year.

With the deficit equal to 12.7% of GDP, Greek Prime Minister George Papandreou's government has been under immense pressure from the European Union to take immediate steps to address the crisis and bring the country's budget deficit to permitted EU level.

In January this year, the Greek government announced a stability program, which it says will help the country reduce the budget gap to 2.8% of GDP in 2012 from the current 12.7%. In addition, Greece announced plans last month to freeze pensions, slash civil service bonuses and raise sales tax on fuel, tobacco and alcohol as part of its austerity measures.

The new package of public-sector pay-cuts and tax hikes, approved at a Cabinet meeting in Athens on 3rd March, envisages an extra €4.8-billion ($6.6 billion) saving, equivalent to two% of the gross domestic product.

The new austerity measures came after Prime Minister Papendrou was left with no other option but to adopt cost cutting measures for the third time in as many months to convince European allies and investors that it can bring under control the region's biggest budget gap. However, the move has prompted workers unions to call a series of industrial actions.

Despite the existing financial problems, Greece managed to raise 1.56 billion Euros ($2 billion) through the sale of its high-yielding short-term treasury bills in a debt auction held Tuesday, just days after the Eurozone countries agreed to provide Athens with a financial safety net if required.

Finance Ministers of the 16-nation Eurozone agreed last Sunday to provide up to 30 billion Euros (roughly $41 billion) in emergency loans at below-market interest rates to the debt-stricken Greece if it requires them. The package also involves the International Monetary Fund, which will make a further 10 billion Euros (roughly $14 billion) available to Athens this year.

Though Greece's debt auction on Tuesday received overwhelming response from investors, the interest rate offered for the bonds were steeply higher when compared to that of the treasury bills sold during Greece's previous short-term debt auction in January.

The Greek government has offered a 4.85% for the 52-week bills and 4.55% for the 26-week bills sold in Tuesday's debt auction. In comparison, the 12-month treasury bills sold in January carried an interest rate of 2.2%, while the 6-months bonds were offered 1.38%.

The Greek government had originally planned to raise €1.2 billion in debut auction, divided equally between 52-week and 26-week Treasury bills. Though bids for 52-week bills reached €3.9 billion and the 26-week bills attracted bids totaling €4.6 billion, Greece's Public Debt Management Agency said later that it ultimately sold €780 million of bills in each auction.

Earlier, the Greek government managed to sell 10-year bonds worth 5 billion Euros in March at a rate of 6.3%, which is several points higher than that paid by Germany on its benchmark 10-year bonds. But Greece is expected to face another crunch situation in April and May, when the country faces more than 20 billion Euros in debt redemption.

Greece capitulated to market pressure on Thursday and took an important step towards a bail-out from its Eurozone partners and the International Monetary Fund as it formally sought "consultations" over a €30bn-plus ($40bn, £26bn) loan package to stave off default.

In a letter to the European Commission, Greece's finance minister, George Papaconstantinou, said Athens wanted to discuss "a multi-year economic policy programme with the Commission, the European Central Bank and the International Monetary Fund".

The announcement ended weeks of speculation that the IMF will be directly involved in the Greek rescue, during which the fund has held back from commenting for fear of getting ahead of a formal request from Athens.

The letter, which would help set in motion the first bail-out of a Eurozone country by the IMF, marks a key step towards Greece drawing down funds from its Eurozone partners and the Washington-based body.

Until now Athens has bet that the promise of financial assistance would be enough to reduce its borrowing costs and allow it to roll over its sovereign debt and continue to pay its bills. But, while Mr Papaconstantinou was careful to say Athens had not yet decided to seek help, his letter to Brussels begins a formal process that is likely to be difficult to end.

The move came as yields on 10-year Greek bonds neared a record high. Spreads over German bunds reached 426 basis points before falling back to around 400 after the announcement was made.

Mr Papaconstantinou's letter said Greece was not yet committed to activating the package - which would come with tough conditions that are likely to include public sector job cuts and stringent pension reform.

"The programme would be supported by financial aid from the Eurozone countries and the IMF - if the Greek authorities decide to ask for such aid," Mr Papaconstantinou said.

But analysts in Athens said the request for talks "amounts to a done deal".

"Resorting to the EU-IMF mechanism is irreversible at this point. Otherwise we may see tremendous pressure on spreads," said a top economist.

Experts warned that the Eurozone and the IMF may end up jostling for primacy in controlling the rescue.

Although the IMF has been involved in co-financed rescue packages before, as in Latvia and Hungary, it was clear that the fund took the lead role in setting conditions and disbursing tranches of money.

The IMF would be expected to make available another €10-15bn as a stand-by loan on top of the €30bn available from Eurozone member-states.

If Greece applies for the package it would be able to cover its borrowing requirement for the rest of the year, analysts said.

So all things considered, Greece is not yet out of the woods and is affecting Germany in a big way it seems.

Germany might consider exiting Europe's current monetary union to create a smaller bloc as the Greek crisis threatens to turn the Euro area into a region of "fiscal profligacy," Morgan Stanley said.

Greek rescue measures "set a bad precedent for other Euro- area member states and make it more likely that the Euro area degenerates into a zone of fiscal profligacy, currency weakness and higher inflationary pressures over time," said Joachim Fels, co-chief global economist at Morgan Stanley in London, in an April 14 note. "If so, countries with a high preference for price stability, such as Germany, might conclude that they would be better off with a harder but smaller currency union."

European Union leaders on April 11 offered debt-stricken Greece a rescue package worth as much as 45 billion Euros ($61 billion) at below-market interest rates as they try to end its fiscal crisis and restore confidence in the Euro. The European Central Bank also helped Greece by abandoning a plan to revert to old collateral rules that may have rendered its government bonds ineligible at money market operations.

"The lesson for other Euro area members from the Greek bail-out package is that no matter how badly you violate the Stability and Growth Pact guidelines, financial help will be forthcoming, if push comes to shove," Fels said. "This introduces a serious moral hazard problem into the European equation. Fiscal slippage in other countries has now become more rather than less likely."

Fels stressed that a Euro breakup isn't Morgan Stanley's "main scenario," though the risk is "far from negligible."

The European Union's rescue package has failed to push down the interest rates on Greek debt as the government struggles to convince investors it can cut its deficit, the highest in the Euro's history, below the European Union's 3% limit by 2012. The shortfall was 12.9% last year.

Spanish Finance Minister Elena Salgado, who is hosting a meeting of EU counterparts in Madrid, said she doesn't expect Greece to trigger the rescue Friday.

The extra yield that investors demand to hold Greek 10-year bonds over similar-maturity German bunds stood at 402 basis points Thursday compared with a record 442 basis points last week.

Somehow I cannot imagine Germany stepping out of the European Monetary Union - for the moment, there is relative safety in numbers believe it or not.

I cannot see Germany opting for a smaller group of countries with which to form a mutual currency. I liken it to a party where if you are stuck in a corner with say, the French; if you've only got the Dutch alongside you, you have to have dialogue otherwise you'd appear rude.

But if you've got the Greeks and the Spanish at the party also, there is every reason to go off and talk to someone else and leave the French and Dutch to talk amongst themselves about the latest strike, the working-week and the current state of the Dutch football team!

Not the greatest analogy maybe, but I think you get my drift!

On to the numbers on the boards for the week that was:

US Markets

How the US did this week .....

US Summary The optimism on Wall Street was punctured Friday with US stock prices falling sharply after the Securities and Exchange Commission charged Goldman Sachs with fraud.

The move interrupted the markets' six-day winning streak and overshadowed some of the week's strong corporate earnings results.

Shares in Goldman Sachs dived 12.8% to $160.70. The fraud charges concern the packaging and selling of collateralised debt obligations. The bank is charged with not disclosing the role Paulson & Co, a hedge fund, played in a transaction.

After the close, the S&P 500 was down 1.6% at 1,192.13, leaving it 0.19% lower during the week. The Dow Jones Industrial Average lost 1.1% to 11,018.66, leaving it up 0.2% on the week. The Nasdaq Composite was 1.4% lower at 2,481.26, but up 1.1% for the week.

Bank of America fell 5.5% to $18.41 Thursday even as it was reporting better first-quarter earnings than expected.

The results were boosted by a strong performance by its investment banking division that is largely made up of the Merrill Lynch business it bought at the height of the financial crisis.

Net income was 28 cents per share, compared with consensus analyst estimates of 9 cents per share.

JPMorgan was 0.9% lower on the week to $45.55 after reporting earnings per share of 74 cents, more than double the same period last year, and beating expectations of 64 cents per share.

Citigroup fell 5.2% to $4.56 but rose 0.2% for the week. The stock broke the key $5 mark on Thursday for the first time since October.

Moody's, the agency that rates corporates and structured derivative transactions, declined 7.6% Thursday to $27.41 as news of the legal action against Goldman emerged.

Google lost 7.6% to $550.15 after reporting quarterly earnings after Thursday's close that fell short of some "whisper" numbers among traders but beat consensus analyst estimates.

It posted net income of $1.96bn, or $6.06 per share, up from $1.42bn, or $4.49 per share, the year before.

General Electric was 2.7% lower at $18.97 as the infrastructure, finance and media conglomerate reported disappointing first-quarter revenues.

However, earnings at GE were significantly higher than expected at 21 cents per share, topping consensus analyst estimates of 16 cents per share.

The airline sector was lower across the board Thursday on worries about air traffic disruption in Europe resulting from the eruption of a volcano in Iceland.

The market was unimpressed with fresh merger talks between Continental and United Airlines.

Continental Airlines fell 3.3% to $22.98, Delta Air Lines lost 3.6% to $13.87 and UAL Corp, parent of United Airlines, declined 3% to $22.83.

As the earnings season kicked into full swing this week, a number of blue-chip corporates reported strong first-quarter results.

Package delivery group UPS added 5.9% to $68.21 on the week as it reported earnings of 71 cents per share on Thursday, up from 52 cents last year and above consensus analyst expectations of 57 cents.

Yum Brands rallied 4.9% to $42.70 on the week after the restaurant chain operator, which owns KFC, Taco Bell and Pizza Hut, said on Wednesday that profit in the quarter had risen 11%, boosted by strong sales in China.

European Markets

What has been happening in Europe this week .....

Europe Summary European stocks plummeted, erasing a weekly advance for the Stoxx Europe 600 Index, as US regulators sued Goldman Sachs Group Inc. for fraud and a gauge of consumer confidence unexpectedly declined.

Deutsche Bank AG fell the most in nine months, leading European financial shares 2.7% lower. Xstrata Plc, the world's fourth-largest copper producer, dropped 4.4% as China acted to cool real-estate speculation. Air France-KLM Group slid the most in two months as a cloud of ash from an Icelandic volcano forced the cancellation of flights in northern Europe for a second day.

The Stoxx 600 plunged 1.6% to 267.92, the biggest drop since Feb. 25, bringing this week's drop to 0.7%. The gauge had been heading for a seventh straight weekly increase until the Securities and Exchange Commission said Goldman Sachs misstated and omitted key facts about a financial product tied to subprime mortgages as the US housing market was beginning to falter.

The Stoxx 600 has surged 5.5% in 2010 as the European Union agreed a $61 billion aid package to help Greece tackle the region's biggest budget deficit and the US Federal Reserve pledged to maintain record-low interest rates for an extended period to secure the economic recovery.

EU finance ministers meeting Friday in Madrid said Greece doesn't have an immediate plan to trigger the rescue package even as the country's bond yields rose to the highest since before the bailout plan was announced.

Benchmark stock indexes fell in all 18 western European markets, except Iceland (how ironic is that, given the volcanic ash it 'gifted' to the rest of Europe!). The UK's FTSE 100 dropped 1.4%, Germany's DAX slid 1.8% and France's CAC 40 plunged 1.9%. Greece's ASE Index sank 1.6%.

GERMANY

German stocks declined the most in two months, with the benchmark DAX Index erasing its weekly gain, as banks tumbled after the US Securities and Exchange Commission sued Goldman Sachs Group Inc.

Deutsche Bank AG slid 7.3% as the SEC accused Goldman Sachs of defrauding investors. Deutsche Lufthansa AG, Europe's second-biggest airline, lost 4.1% after a cloud of ash from a volcano in Iceland shut airports in northern Europe for a second day. ThyssenKrupp AG and Salzgitter AG, Germany's largest steelmakers, followed European basic-resource shares lower.

The DAX fell 1.8% to 6,180.90 in Frankfurt, the biggest drop since Feb. 5 and bringing the weekly loss to 1.1%. The measure climbed for six straight weeks previously as the European Union agreed on a contingency rescue package to help Greece reduce Europe's biggest budget deficit and the Federal Reserve pledged to keep interest rates low for an extended period. The broader HDAX Index slid 1.7% Friday.

Deutsche Bank, the country's largest, sank 7.3% to 55.99 Euros, the steepest decline since July 2009. Commerzbank AG retreated 2.9% to 6.37 Euros. The SEC accused Goldman Sachs and one of its vice presidents of defrauding investors by misstating and omitting key facts about a financial product tied to subprime mortgages.

Lufthansa tumbled 4.1% to 12.74 Euros, the first retreat in three days, as the ash cloud grounded thousands of flights across Europe. Air Berlin Plc, Europe's third-biggest discount carrier, decreased 2.5% to 4.22 Euros.

Fraport AG lost 2.7% to 40.34 Euros. The company's Frankfurt airport was closed this morning and will remain closed for an undetermined period, an official at Germany's DFS air traffic control agency said.

As many as 15,000 flights may be lost in the region Friday, or about half the usual timetable, according to Brian Flynn, operations chief at Eurocontrol, which oversees the region's flight paths. That's up from 8,000 cancellations Thursday.

Salzgitter declined 2.8% to 67.01 Euros, while ThyssenKrupp AG lost 2.1% to 25.99 Euros. European basic- resource shares fell 3.4%, the worst performance among 19 industry groups in the Stoxx Europe 600 Index Friday.

Continental AG increased 1.4% to 39.40 Euros, the highest close in more than two months. Europe's second-largest auto-parts maker was rated "buy" in new coverage at UBS AG, which said "the recovery in automotive production combined with good exposure to attractive segments could lead to 10% growth in automotive this year."

HeidelbergCement AG rose 1.2% to 45.46 Euros, the highest close since January, as investors speculated the world's third-biggest cement maker will join the DAX as early as June.

German think tanks on Thursday raised their 2010 growth outlook for the economy saying that fiscal policies will continue to provide perceptible stimulation this year.

In a joint forecast, leading think tanks of the country said Germany's real gross domestic product should increase 1.5% during the course of this year. It compares with an earlier forecast of 1.2%. In the coming year, real GDP will increase by 1.4%. The recovery will continue to be driven by exports, which had experienced an unexpectedly strong collapse in the recession.

After 2011, the German economic recovery is expected to continue at a slightly accelerated pace. Nevertheless, after the strong collapse last year, real GDP will not reach the level of 2008 until 2013, they said.

Unemployment will nevertheless decrease slightly, since the labor force potential is declining as a result of demographic developments. For 2011, stagnation in employment and a further decrease of unemployment is anticipated. The unemployment rate should fall from 8.1% in 2010 to 7.9% in 2011.

Economic research institutes foresee moderate in consumer prices. The inflation rate is forecast to be at 0.9% this year and may move to 1% in the coming year.

Germany's public deficit is forecast to be at 4.9% of GDP this year. In the coming year, a decline to 4.2% is foreseen.

Germany's number of business insolvencies increased 4.2% year-on-year in January, the Federal Statistical Office said on Wednesday. In December, the business insolvencies were up 15.5%.

German insolvency courts reported 2,547 business insolvencies in January, the statistical office said.

Meanwhile, the consumer insolvencies increased 4.6% on an annual basis to 8,265 in January. At the same time, total insolvencies of other private debtors and of estates grew 2.8% to 13,020 insolvencies.

Tuesday, Germany's Federal Statistical Office announced that the consumer price index or CPI rose 1.1% on an annual basis in March, unrevised from the preliminary estimate and faster than the 0.6% growth in February. The CPI was up 0.5% a year ago.

Food and non-alcoholic beverages prices rose 0.1% in March, while clothing and footwear prices climbed 0.9%. Transport charges were up 5.4%.

The CPI monthly inflation for March was confirmed at 0.5%, after a 0.4% rise in February.

Meanwhile, the harmonized index of consumer prices or HICP rose 1.2% year-on-year in March, revised from 1.3% growth estimated initially. Month-on-month, the HICP rose 0.6%, unrevised from the preliminary estimate published on March 29.

They also announced that the wholesale price index or WPI rose 4.3% on an annual basis in March, faster than the 2.1% growth in the previous month. Economists expected an increase of 3.6%.

On a monthly basis, the WPI increased 1.3% in March, accelerating from 0.1% rise in the preceding month. Economists were looking for an increase of 0.5%.

FRANCE

France's CAC 40 Index tumbled 79.02, or 1.9%, to 3,986.63 in Paris, led by a retreat in bank shares after the US Securities and Exchange Commission sued Goldman Sachs Group Inc for fraud. The SBF 120 Index slid 1.9% to 2,934.36.

BNP Paribas SA dropped 3.8% to 55.35 Euros. Credit Agricole SA declined 3.5% to 13.20 Euros and Societe Generale SA declined 2.8% to 45.21 Euros.

Air France-KLM Group lost 44 cents, or 3.4%, to 12.44 Euros after Europe's biggest carrier canceled all flights in and out of Paris airports this morning and forecast major disruptions after a cloud of volcanic ash from Iceland grounded planes.

Bourbon lost 2.9% to 32.11 Euros after Axa Group's Matignon Developpement sold a stake in the company, according to the terms of the deal obtained by Bloomberg News.

UBS AG placed 1.04 million Bourbon shares via an accelerated bookbuild at 32 Euros apiece.

Carrefour SA rallied 52 cents, or 1.4%, to 38.39 Euros. Europe's biggest retailer reported a 5.5% increase in first-quarter sales on growth in France, Asia and Latin America, and said it plans to buy back its own shares for the first time since 2007.

Dassault Systemes rose 47.5 cents, or 1%, to 47.28 Euros as Goldman Sachs Group Inc. added the shares to its "conviction buy" list.

Suez Environnement fell 59 cents, or 3.4%, to 16.58 Euros as Deutsche Bank AG lowered its recommendation for Europe's second-largest water company to "hold" from "buy."

Veolia Environnement dropped 74 cents, or 2.8%, to 25.46 Euros. The company said Qatari Diar has acquired a 5% stake and will have a representative on the board of directors.

Higher energy prices drove French inflation at a slightly faster than expected pace in March, official figures showed Tuesday.

The consumer price index rose 1.6% year-on-year in March, faster than 1.3% recorded in February, statistical office Insee said. Economists had forecast a rate of 1.5%. On a monthly basis, the CPI grew 0.5%.

The CPI without tobacco increased 0.5% month-on-month, taking the annual rise to 1.5%. Adjusted for seasonal variations, the CPI went up by 0.2% month-on-month and 1.6% over the previous year.

Meanwhile, the harmonized index of consumer prices rose 1.7% annually in March, compared to the 1.6% rise expected by economists. The HICP was up 0.5% from the preceding month.

BELGIUM

The Bel 20 in Brussels closed out the week on 2,687.36, a dip of 1.02% Friday.

Belgian health products distributor Omega Pharma reported a 4.4% rise in first-quarter turnover and repeated its forecast of similar growth for the full year.

The company, which sells non-prescription products to pharmacists, said sales reached 202 million Euros ($275.5 million), just shy of the average forecast in a Reuters poll of five analysts of 203 million.

Sales in core market Belgium and emerging markets, chiefly in eastern Europe, were better than expected, with increases of 11 and 31% respectively.

Sales dropped by 10% in France and were up a modest 2% in the rest of western Europe, with growth in the Nordics, Spain, Switzerland and Britain, but weakness in Germany and Greece.

Omega, which sells wart treatments, mosquito repellent and pregnancy tests to pharmacists, said sales growth this year should be about 4%.

Belgium is a nation with a rich history, especially when it comes to gambling. As a matter of fact, some of the oldest documents that record gambling in Europe were located in Belgium and reference card games in the 1300's. It was also documented that a lottery has been run since the 1400s.

Needless to say, over the centuries Belgian gambling law has nevertheless gone through some major changes. The online gambling industry is currently being subjected to some major changes due to the outcome recent legislation on how it should run.

Belgium's Chamber of Representatives passed new gaming legislation last month that's going to change the industry dramatically. The new legislation has introduced new policies regarding licensing and registration which will be put into action by the end of this year.

The new laws will affect land-based and internet gambling in Belgium but will not affect the national lottery. Companies that wish to offer online gambling services within the nation's borders will from this point on be required to obtain a land-based license first. They will also be required to base any operation servers within the nation.

All companies will be licensed and regulated by the Belgian Gaming Commission and subject to the guidelines that it provides. A limit has been place on the number of gambling institutions that can be licensed through Loyal Decree, and high-level competition is anticipated.

Though these laws have come hot off the press, it is likely that those who currently play at online gambling sites in Belgium will continue to do so in the future. This is possible due to the fact that foreign companies are located in regions where online gambling is legal and fall outside the jurisdiction of the Belgian government.

Although the Belgian steel industry is set to stage a recovery in 2010, the long-term outlook for the sector is gloomy with output over the next five years likely to remain at least 25% down on pre-recession levels with the likelihood of mill closures over the medium-term, according to our latest Belgium Metals Report.

According to the World Steel Association, in 2009 Belgium's steel output fell 48.1% year-on-year (y-o-y) to 5.64mn tonnes, in line with our forecasts. We estimate that hot-rolled output fell 50.3% y-o-y to 5.78mn tonnes, with exports down 46.2% to 11.8mn tonnes. Finished steel consumption fell 42.3% to 3.54mn tonnes, dragging imports down 39.2% to 9.66mn tonnes. Aluminium consumption, which is heavily influenced by trends in the automotive industry, fell even faster than demand for steel in Belgium, with the market forecast to fall by 55.4% y-o-y to under 233,000 tonnes, though it should recover to around 413,600 tonnes by 2014.

Research finds that metals prices in Belgium bottomed out in late 2009, indicating that the market had reached a state of equilibrium. The question is whether demand will support the increase in production as steel mills come back on line.

Although inventories at mills and service centres were reportedly low by the beginning of 2010, end users were still suffering financial problems. With metals demand linked to GDP growth, a recovery in consumer spending and investment in both Belgium and the rest of the Eurozone is crucial to the recovery of the nation's metals industry.

The recession may be officially over, but the outlook is mixed in 2010. Having emerged from recession in Q309, Belgium has continued to shake off the worst effects of its economic downturn into 2010. Leading indicator data suggest that something of a recovery is underway, with industrial production, trade and business confidence all improving through to the end of 2009. We believe that metals output will grow 16.2% in 2010 with monthly output unchanged from H209. This will be largely driven by demand elsewhere in Europe.

THE NETHERLANDS

In Amsterdam, the AEX finished the day and the week on 349.75, down 1.64% for the last trading session of the week.

Dutch retailer Ahold is looking at expanding its operations into Belgium this year, chief executive officer John Rishton revealed at the group's annual meeting of shareholders this week.

Mr Rishton said that the proposed move was one of a number of steps forward that the group was looking to take in its European or US markets in 2010.

"In Europe, we are evaluating organic growth for Albert Heijn into Belgium - in particular whether we can push over the border and use the logistic strength of our Dutch operation," he said.

As part of the speech, Mr Rishton said that Ahold was planning to increase capital expenditure by around 40% to €1.1bn, while it saw many competitors pulling back, with part of this used to support a faster roll out of remodelled stores.

In the Netherlands, Ahold would look to grow beyond satisfying consumers' food requirements into meeting their everyday needs, he noted, while the group would look to improve store formats and launch nearly 1,000 private label products in the US.

Retail sales value in the Netherlands fell 4% year-on-year in February, slower than the 5% decrease in the previous month, the country's Central Bureau of Statistics said on Thursday.

In volume terms, retail sales slumped 5% in February, also slower than the 6.3% decline in the prior month.

Tuesday, the Netherlands Central Bureau of Statistics announced that the volume of exports increased 11% on an annual basis in February, faster than the 8% growth in the previous month. Meanwhile, the volume of imports grew 5%.

The value of exports increased 13% year-on-year to Eur 28 billion in February, while the value of imports rose 9% to Eur 24 billion. Thus, the trade surplus amounted to Eur 4 billion in February, which was up by Eur 1.3 billion from the previous year.

Dutch company ASML, a key supplier of computer chip-making systems, said Wednesday it had turned last year's losses into a 107-million-Euro first quarter net profit, predicting record 2010 sales.

The figure was up from a loss of 117.2 million Euros (160 million Dollars) reported in the first quarter of 2009, and a 151-million-Euro net loss for 2009.

In the fourth quarter of last year, the company had booked a 50-million-Euro profit.

"Our first quarter 2010 sales rose to above 740 million Euros and bookings came in at 1 billion Euros, in line with our expectations and adding confidence in a prolonged recovery of the semiconductor industry," ASML chief executive Eric MEurice said in a statement.

He added the company was "on a track to 2010 full-year sales above our 2007 peak of 3.8 billion Euros."

Second quarter sales were expected to total about a billion Euros.

The company has about 6,500 employees in 15 countries. It claims to be the world's leading provider of lithography systems for the semiconductor industry, manufacturing machines for the production of integrated circuits or chips.

SWITZERLAND

Zurich's SMI rounded off the week on 6,893.69, down 1.06% for the day Friday.

Syngenta AG , the world's largest agro-chemicals company, undershot analyst expectations with $3.5 billion sales in the first quarter and said cheaper raw materials should buoy its 2010 results.

The Swiss company, which makes weed- and insect-killing products and develops genetically-modified seeds, had a tough 2009 because of weak demand and low prices for farming products.

It said 2010 should benefit from lower raw material costs, favorable currency movements and margin enhancements in seeds.

"These elements will enable growth in operating income which will exceed earnings per share progression owing to higher tax and net financial expense," Syngenta said in a statement.

An unexpected sales rise was experienced in the first quarter sales of Roche Holding AG as the Swiss Pharma company confirmed its profit on Thursday. Reason for the elevation is being stated as the "refreshed demand for Avastin", a cancer treatment drug. Another reason for gains is the noticeable performance of the company in the upcoming markets.

The investor reaction also increased because of the decision of the Basel-based company, to put forth for regulatory approval in U. S. its breast cancer drug T-DM1 following the accepted trials in phase II. This drug was recently hanging for approval after several drug examination failures.

The sales for the company, also the firmest drug pipelines, inclined to 12.25 billion Swiss francs from CHF11.58 billion a year earlier, in three months, surpassing the analysts' predictions of CHF11.89 billion.

Chief Executive Severin Schwan, stated that the company has received a good start in the beginning of the year and that the pharmaceuticals and diagnostics divisions of the company have been exceeding the growths expected in their markets.

He also expressed that the company, largest cancer drug maker globally, was "fully on track for 2010" and that he expects that the sales will further rise.

The vote by shareholders of Swiss bank UBS not to absolve their 2007 management of any blame for losses is unikely to lead to a legal case, a banking expert says.

But Peter V. Kunz, a professor of economic law at Bern University told swissinfo.ch that Wednesday's vote against the so-called discharge, usually a routine affair at annual general meetings, nevertheless has certain implications.

The vote against - 52.8% - has been widely interpreted as a strong signal of disapproval by the shareholders. UBS chairman Kaspar Villiger admitted that it was a "clear sign of dissatisfaction".

In a separate non-binding vote, almost 40% of shareholders opposed the bank's bonus plan for 2009. Compensation at big companies, particularly major banks, has come under close public scrutiny in Switzerland and is the subject of a people's initiative aimed at curbing excesses.

Swiss banks UBS, Credit Suisse and Vontobel are among 146 financial institutions that have invested billions of Dollars in cluster bomb producers, campaigners say.

The investments occur despite the entry into force of the international treaty banning cluster munitions on August 1, groups claim. Switzerland, which formally signed the text in 2008, is expected to ratify it in 2011.

"It's unacceptable that our pension funds or the savings of the Swiss people are invested in producing weapons that kill and mutilate children around the world," Paul Vermeulen, director of Handicap International Switzerland, told reporters in Geneva on Wednesday.

UBS said it was moving away from such unethical investments.

"For its actively managed Luxembourg and Swiss-domiciled retail and institutional funds, UBS Global Asset Management is implementing a process to prevent investments in companies involved in anti-personnel mines and cluster munitions," UBS spokesperson Dominique Scheiwiller told swissinfo.ch.

The bank stressed it was committed to "responsible corporate behaviour". It has identified guidelines covering industry sectors that have a high potential for environmental and social risk.

It also has clear internal regulations prohibiting the financing of trade and export of certain war materials, including anti-personnel land mines and cluster munitions, it said.

"The report shows [the bank] does not play a major role in providing services for companies which, among others, manufacture the ammunition in question," said Credit Suisse spokesman Alex Biscaro.

AUSTRIA

The ATX in Vienna ended the trading day Friday at 2,733.08, a drop of 2.06% for the Friday session.

Cash-strapped Greece is deeply in debt with Austrian banks, it has emerged.

The Bank for International Settlements (BIS) - which coordinates regulations in the field of financial services to promote international financial stability - said the financially-struggling European Union (EU) member state owes Austrian banks around 4.5 billion Euros.

The institute's figures date back to September 2009 and are the most recent available statistics.

France was Greece's biggest creditor with around 75 billion Euros, according to reports.

Austrian Erste Group reportedly had exposures of around one billion Euros in Greece at the beginning of this year, 700 million Euros of which were government bonds.

Raiffeisenzentralbank (RZB) said recently it had investments of less than 300 million Euros in the country EU leaders recently agreed on a "rescue plan" for.

Volksbank AG bosses said most of its 187 million Euros of investment in Greece were loans, while BAWAK PSK officials announced it had government bonds of around 90 million Euros in the country.

Bank Austria (BA) meanwhile failed to make a statement.

Bank Austria officials have rejected claims by Freedom Party (FPÖ) leader Heinz-Christian Strache that customers' data were at risk after it relocated its data centre to Italy.

BA said Tuesday: "Customers' data continue to underlie the Austrian bank secrecy rules. Last year's relocation of the Bank Austria customers' data centre to Verona took place in full compliance with the Austrian bank secrecy law and data protection rules."

Strache accused Vienna Mayor Michael Häupl of the Social Democrats (SPÖ) of transferring data of the institute's 1.8 million Austrian customers by passing an "illicit directive".

The right-winger claimed Italian authorities were now able to access the whole Austrian customers' data stock "anytime".

BA - the biggest subsidy of Italian banking group UniCredit - however stressed the accessibility of all this information would still succumb to Austrian law.

OMV's Romanian subsidiary Petrom is investing 100 million Euros in wind power production, it was announced Thursday.

Petrom said it acquired the company SC Wind Power Park SRL, which owns a fully authorised wind power generation project, in the south-eastern Romanian town of Dobrogea with a designated capacity of 45 megawatt.

Petrom will built and operate the wind power plant, according to a Romanian Times report. The online newspaper also says the plant will start producing energy mid 2011.

Housing construction costs soared by more than three% last month, according to research by federal statistics agency Statistik Austria.

The body announced Thursday costs in the housing building sector jumped by 3.1% in March compared to price levels in the same month of 2009.

Experts said soaring prices for plastics, petrol and other substances as well as the current fluctuation of steel prices were to blame for the development.

Road construction costs meanwhile increased by 2.4% year on year last month.

Passengers numbers at Vienna International Airport (VIA) increased last month.

VIA said 1,492,135 people used the airport in March, up by nine% year on year. There has been just a 5.4% year on year increase in February 2010.

Officials also said the number of flights soared by three%.

An important aspect for the airport's business are passengers coming from and travelling to Eastern Europe. VIA announced 12.9% more EE travellers used VIA last month.

Fitch Ratings on Friday affirmed Austria's long-term foreign and local currency Issuer Default Ratings at 'AAA', respectively. The rating outlooks on both long-term ratings remained stable. Fitch also affirmed country ceiling at 'AAA' and its short-term foreign currency IDR at 'F1+'.

"Although the economy contracted in line with the 'AAA' median, the deterioration in the fiscal deficit was modest relative to many of its 'AAA'-rated peers, while financial sector risks were contained below Fitch's expectations," Andres Klaar, Associate Director in Fitch's Sovereigns Group said.

The rating agency assessed that continuing downside risks to the sovereign balance sheet are mainly related to the banking sector which has a disproportionally high exposure to Central and Eastern Europe. Further, Fitch noted that economic contraction in 2009 was 3.6%, which was close to the 'AAA' median decline of 3.7%.

Fitch added that Austria's creditworthiness remains supported by its wealthy, high-income and diversified economy. The strong international competitiveness brightens the outlook for export-led growth. In addition, Austria's long-term public finances are on relatively strong ground due to recent pension reform.

SWEDEN

In Stockholm, the OMX headed into the weekend on 1,050.24, dropping not as much as other European indices but down 0.29% on the Friday session.

Swedish central bank Governor Stefan Ingves warned that household debt levels can't continue to rise and said residential property inflation is a "concern."

"Increased household debt can't go on forever; the same thing holds for house prices," Ingves said in an interview in Madrid Thursday. "We have an inflation target, we don't have a target for house prices, but it's an issue of concern."

House prices in the Nordic economy rose for an 11th quarter in the three months ended March, soaring an annual 9%, Statistics Sweden said Thursday. At the same time, household credit is rising, with growth accelerating to an annual 9.3% in February, according to the office. Record-low borrowing costs have fueled a property bubble that may result in a 20% house price slump and shave a fifth of the value of gross domestic product, the National Housing Credit Guarantee board said on Feb. 23.

"The issue is not one of levels, the issue is one of direction," Ingves said.

The Riksbank has left the benchmark rate at a record low 0.25% since July, and said in February it will bring forward a tightening cycle to "summer or early autumn," from "autumn" previously.

At the same time, the government of Prime Minister Fredrik Reinfeldt has pushed through stimulus measures to support demand in an effort to keep a lid on unemployment.

Sweden's government Thursday cut its 2010 growth forecast and said it will spend more to stimulate the economy as it trails the opposition in opinion polls ahead of parliamentary elections in five months.

Gross domestic product will expand 2.5% this year instead of 3% as predicted on Jan. 27, Finance Minister Anders Borg said. GDP will rise 3.9% in 2011, compared with a previous forecast of 3.6%, and grow 3.5% in 2012, he said.

"There are various indications that Sweden has coped with the crisis better than many other countries, thanks to responsible financial policies," Finance Minister Anders Borg said.

"It is important to ensure that a high rate of unemployment does not become persistent," he added.

The government is committing a further SEK 4.9 billion during 2010 to stimulate the demand for labor.

Sweden's economy shrank the most since World War II last year because of falling demand for its exports, which make up about half of its output.

SKF AB shares rose to their highest level in almost three years Friday as the world's biggest maker of ball bearings said first-quarter earnings and sales exceeded analysts' estimates.

SKF rose as much as 8.4%, and was up 9.9 kronor, or 7.4% at 143.8 kronor in early Friday Stockholm trading. Shares of SKF have gained 16% so far this year, more than the 11% gain of the OMX 30 benchmark index.

SKF is a bellwether for industrial demand because its ball- bearings are used in cars, household appliances and factory equipment. A typical western household uses about 130 different SKF bearings in various products, according to the company. It is scheduled to publish full first-quarter earnings on April 20.

Shares in other Swedish industrial companies such as Sandvik AB and Trelleborg AB rose as much as 6% and 7% respectively in Stockholm trading.

Swedish company NCC AB said Wednesday that it has Won a SEK210m contract to expand the Balforsen hydropower plant at Umealven, outside Lycksele, northern Sweden.

The assignment covers the construction of a new power station with a third turbine adjacent to the plant.

The customer is German multi-utility Eon and the project, which is conditional upon a water-rights court ruling from the Swedish environmental court, is expected to start between September 2010 and January 2011.

Accordingly, NCC will register the order in the third quarter of 2010 at the earliest.

Autoliv - the global leader in automotive safety systems - Thursday announced that it had successfully exceeded the 90% threshold required to make its 51% owned Estonian subsidiary AS Norma wholly owned.

At the close of the offer period Thursday, shareholders representing 42.7% of all shares in the Estonian company had accepted the offer. This corresponds to 87.2% of the Norma shares that Autoliv did not own. Following the settlement Autoliv will hold 93.7% in Norma. Remaining minority shareholders that did not submit their acceptances by Tuesday, will according to Estonian law be given an opportunity to accept the offer, before compulsory sale proceedings will commence.

The price of the 49% of the Norma shares, previously not owned by Autoliv, is approximately $50 million.

DENMARK

The OMX in Copenhagen completed a busy trading week on 402.68, off 0.64% Friday.

Monday, the Statistics Denmark announced that the consumer price index or CPI rose 2.2% on an annual basis in March, faster than the 1.9% growth in the previous month. Economists were looking for an increase of 2.1%.

Food and non-alcoholic beverages prices fell 0.5% in March, while clothing and footwear prices rose 1.2%. Transportation charges increased 4.6%.

On a monthly basis, the CPI was up 0.6% in March, faster than the 0.5% expected by economists. In February, the CPI rose 1.2%.

Meanwhile, the harmonized index of consumer prices or HICP grew 2.1% annually in March, after a 1.8% increase in February. The HICP was up 0.7% compared to the preceding month.

Local airline Wings of Bornholm is shutting down at the end of the month due to ballooning costs and declining profits, according to a company press release.

The airline had handled the route between Copenhagen and the island's largest city of Rønne - a route also operated by Cimber Sterling.

Wings of Bornholm had originally hoped to enter into a cooperation agreement on the route with Norwegian Air. But according to public broadcaster DR, Norwegian will now take over the route on its own as of 2 May.

Customers who purchased Wings of Bornholm tickets for flights after 30 April will receive full refunds.

TrygVesta's head of investor relations could face punishment for his conversations with Carnegie Bank about a major reduction in profit expectations

Selected investors got a head start in selling their shares in insurance company TrygVesta prior to the stock's dive last Friday afternoon, according to financial daily Børsen.

At 3pm that day the company issued an extraordinary press release revealing unexpected losses of around 700 million kroner for the first quarter of 2010, largely due to the unexpectedly harsh winter.

But already on Thursday at 2:28 Carnegie Bank had issued a notice to its customers that TrygVesta's department for investor relations had warned them that the significant downward adjustments were on the way.

'We just spoke to TrygVesta's head of Investor Relations about Q1 and understood that because of considerable uncertainty in the market the company has decided to issue a statement with more accurate data,' wrote Carnegie Bank analyst Gianandrea Roberti in the notice.

The communication was marked as high priority by the bank, and the information about the significant winter losses was written into the message's headline.

But it wasn't until 24 hours later that the rest of the stock market got TrygVesta's message about the downgrade that would negatively affect profit expectations for the insurance company by 700 million kroner.

Trygvesta's head of investor relations, Ole Søeberg, acknowledged he spoke with Carnegie Bank prior to the announcement to its customers on Thursday afternoon.

'But I did not say anything contrary to the normal security rules. In my estimation, Carnegie Bank simply put two and two together.'

But Professor Nis Jul Clausen, an expert in stock market regulation at the University of Southern Denmark, called TrygVesta's conduct a clear violation of market rules.

'At minimum it will result in a censure from both the stock exchange and the FSA. Whether the case will entail more than that is hard to tell at this stage,' said Clausen.

According to Børsen research, TrygVesta shares fell by nearly 3% just before the 3pm announcement on Friday, dropping by 11 kroner.

FINLAND

Helsinki's OMX bounded into the weekend on 7,242.36, down 1.96%.

The Bank of Finland reported on Thursday that the current account balance logged a surplus of Eur 98 million in February, down from the Eur 269 million surplus in the previous month.

The goods account surplus rose to Eur 134 million in February from Eur 104 million in January, while that in the services account decreased to Eur 116 million from Eur 135 million.

The income account balance swung to a deficit of Eur 11 million from a surplus of Eur 171 million. The transfers account deficit was unchanged at Eur 141 million.

The central bank also said that the financial account swung to a Eur 3.86 billion deficit in February from a Eur 2.66 billion surplus in the preceding month.

Statistics Finland said on Thursday that the total turnover generated by service industries in Finland fell 1.1% year-on-year in January.

During the three month period that ended in January, services turnover slumped 5.7% annually, faster than the 9.6% decrease in the three months to October period.

Turnover in transport and storage fell 9.1% during the period while turnover in professional, scientific & technical activities was 9.9% lower than in the same period of the previous year.

On the other hand, turnover in arts, entertainment & recreation increased 7.1%.

Finland's retail trade value grew 2% year-on-year in February, after remaining flat in January, it was also reported Thursday. Sales volume rose 1.3% annually during the month after falling 1% in January.

The value of wholesale trade fell 0.2% year-on-year in February compared to the 1.5% decline in the previous month. The pace of decline slowed for a fifth month. In terms of volume, wholesale trade dropped 1.8% yearly after a 1.3% fall in the previous month.

The total annual retail trade in value terms remained unchanged after a 1.7% fall in the previous month. In terms of volume, total trade slipped 1.2% year-on-year following the 1.9% fall in January.

During the January to February period retail sales grew 1% year-on-year, wholesale trade fell 0.8% during the period. Total sales were also down 0.8% annually during the period.

Wednesday, the Statistics Finland announced that the consumer price index or CPI rose 0.6% on an annual basis in March, faster than the 0.1% growth in the previous month. Economists were looking for an increase of 0.5%.

On a monthly basis, the CPI was up 0.5% in March, compared to the 0.4% growth in the previous month. The increase was mainly due to higher prices of liquid fuels and ending of clothing sales, the statistical office said.

Meanwhile, the harmonized index of consumer prices or HICP rose 1.5% annually in March, faster than the 1.3% increase in the preceding month. Month-on-month, the HICP was up 0.6%, after rising 0.4% in February.

NORWAY

The OBX in Oslo closed out the week at 351.56, declining 1.36% in the process.

Statistics Norway reported on Thursday that the country's trade surplus stood at NOK 28.91 billion in March, down from the NOK 33.23 billion in the previous month.

Exports rose 4.1% year-on-year to NOK 70.53 billion in March. Exports excluding crude oil, natural gas & condensates climbed 15.2%.

At the same time, imports surged 14.1% to NOK 41.50 billion - the highest monthly import value since October 2008.

Monday, the Statistics Norway announced that the international reserves stood at NOK 300.56 billion in March, up from NOK 290.93 billion in the previous month. A year ago, international reserves amounted to NOK 314.51 billion.

Foreign currency reserves increased to NOK 234.49 billion from NOK 212.83 billion, while SDRs dropped to NOK 14.5 billion from NOK 14.6 billion.

Meanwhile, nation's reserve position with the International Monitory Fund amounted to NOK 4.16 billion in March, larger than the NOK 3.06 billion in the previous month.

It was also reported Monday that the total gross debt or C3 rose 4.9% on an annual basis in January, faster than the 0.8% growth in the previous month. The total gross debt was up 6.1% in November.

Total gross debt amounted to NOK 4.2 billion in January, up from NOK 4.18 billion in the previous month.

The public gross external loan debt increased 8.3% in January, rebounding from 11.5% fall in the previous month. At the same time, the mainland Norway's foreign debt rose 9.8%, up from 1.1% fall in the previous month.

Meanwhile, the domestic gross debt grew 4.2% in January, same as the previous month. The credit indicator amounted to NOK 3.43 billion.

SPAIN

In Madrid the IBEX finished the day Friday on 11,259.70, a 2.29% dip for the session.

The Spanish banking system faces the biggest risk of "mass unemployment", the country's central bank Governor Miguel Angel Fernandez Ordonez said Tuesday.

"If Spain maintains for a prolonged period these millions of workers out of jobs, the banking system could become an obstacle to achieving economic recovery after being a support for the economy during the crisis," Ordonez, who is also an ECB Governing Council member, said in Madrid.

Among the Eurozone members, Spain has logged the highest rate of unemployment. The jobless rate stood at 19% in February.

Spanish house prices fell 5.3% year-on-year in March following a 5.5% drop in February, property website TINSA said Tuesday. A year ago, house prices fell 9.7%.

House prices in the capital and large cities decreased 5.4% and those in the metropolitan areas fell 5.6%. In the Mediterranean coast, prices were down 7.8%. House prices were 5.7% lower in Balearic and Canary Islands. Other municipalities showed a 4% fall.

In the first quarter, house prices dropped 1.7% compared to the previous year when prices were down 3%.

On the same day, Spain's National Statistics Institute said home sales rose 7.2% month-on-month in February, taking the annual growth to 18.7%.

Spain's annual inflation rose to 1.4% in March, the highest in over a year, the Institute of National Statistics said Thursday. In February, prices rose 0.8%. Economists had forecast annual inflation to rise to 0.7%.

Core inflation rate rose to 0.2% from 0.1% in the previous two months. Food prices dropped 2.1% in March on an annual basis.

On a monthly basis, consumer prices were up 0.7% in March, in line with the economists' forecast. In February, prices declined 0.2%.

The harmonized index of consumer prices calculated for the EU purposes, rose 1.5% year-on-year after growing 0.9% in February. Inflation came in slightly above the flash estimate of 1.4%. Prices rose for a fifth month annually. On a monthly basis, HICP declined 0.7%.

PORTUGAL

The PSI General in Lisbon closed the week out at 2,789.35, like Spain, down 2.29%.

Portugal successfully sold 2 billion Euros ($2.73 billion) of two- and 10-year bonds on Wednesday and Won qualified support from the European Commission for its plans to cut the budget deficit.

But while the country saw strong demand for its bonds, investors priced in higher risk for the longer-dated issue and spreads rose in the secondary market following other peripheral Euro zone countries.

Portugal accepted bids for 1.195 billion Euros of government bonds maturing in 2020 at an average yield of 4.340% and 805 million of 2-year bonds at 1.715%. It had hoped to raise between 1.5 billion and 2 billion Euros in total and the placement came at the top end of the range.

Tuesday, the Statistics Portugal announced that the consumer price index or CPI rose 0.5% on an annual basis in March, faster than the 0.2% growth in the previous month. A year ago, the CPI was down 0.4%.

On a monthly basis, the CPI rose 1.1% in March, rising from 0.1% in February. This was mainly due to rise in prices of clothing and footwear.

The CPI, excluding energy and unprocessed food decreased 0.4% in March from the previous year.

Meanwhile, the harmonized index of consumer prices or HICP increased 0.6% on an annual basis in March, faster than the 0.2% growth in the preceding month. A year ago, the HICP was down 0.6%. On a monthly basis, the HICP inflation rate increased to 1.2% in March from 0.8% last year.

Portugal's services turnover rose 0.2% year-on-year in February after falling 1.1% in January, the Statistics Portugal said Monday.

Employment in the sector decreased 1.7% in February compared to the previous year. Wages and salaries dropped 1.5%, while working hours fell 2.4%.

ITALY

Italy's benchmark FTSE MIB Index fell the most since Feb. 25, losing 532.02, or 2.3%, to 23,007.22 in Milan. The gauge dropped 0.4% this week.

Banca Popolare di Milano declined 14.25 cents, or 3%, to 4.67 Euros. Banks dropped in Europe after the US Securities and Exchange Commission Friday sued Goldman Sachs Group Inc., accusing the company and one of its vice presidents of defrauding investors. Banco Popolare SC (BP IM) lost 19.5 cents, or 3.6%, to 5.20 Euros. Intesa Sanpaolo SpA (ISP IM) fell 8.75 cents, or 3%, to 2.80 Euros. UniCredit SpA (UCG IM) lost 8.75 cents, or 3.8%, to 2.20 Euros. Unione di Banche Italiane SCPA (UBI IM) retreated 23 cents, or 2.2%, to 10.14 Euros.

Dada dropped 31.5 cents, or 6.1%, to 4.85 Euros, snapping a two-day increase. Intermonte Sim SpA downgraded the Internet and mobile-phone company to "underperform" from "outperform."

Dea Capital advanced 3.4 cents, or 2.5%, to 1.37 Euros, a second session of gains. The investment company and Fondi Immobiliari Italiani Sgr SpA said in a statement that they are studying a merger of Dea's First Atlantic Real Estate Sgr SpA and FIMIT "with the objective of creating a leading European operator in real estate asset management."

Mediobanca retreated 30 cents, or 3.8%, to 7.71 Euros. Equita Sim SpA said in a note that the bank's third-quarter revenue "mix" may be "lackluster" and trimmed its price projection to 10 Euros from 10.5 Euros.

Prysmian dropped 69 cents, or 4.5%, to 14.82 Euros, the lowest this month. Equita Sim SpA downgraded the world's second-biggest cable maker to "hold" from "buy" and removed the stock from its "main portfolio."

Saipem, Europe's largest oilfield-services provider, lost 94 cents, or 3.2%, to 28.73 Euros. Crude oil fell the most in 10 weeks.

STMicroelectronics retreated for a second day, falling 21.5 cents, or 3%, to 7.53 Euros. Technology stocks dropped across Europe after first-quarter profit from Google Inc. missed some estimates.

Tenaris, the world's largest maker of seamless pipes used to extract oil and gas, fell a fourth day this week, losing 51 cents, or 3.2%, to 15.39 Euros. Goldman Sachs Group Inc. which has a "neutral" rating on the stock, said in a note that "in the near-term, the company is likely to continue to struggle with declining pricing, low profitability in the US markets, and an unfavorable overall mix of products."

A Milan court rejected a debt- restructuring proposal by Snia SpA and declared the company insolvent, newswire Ansa reported, citing a decision by Judge Filippo Lamanna. Snia's shares were halted in Milan pending news, according to the Italian exchange.

Italy's non-seasonally adjusted total trade deficit was Eur 2.33 billion in February, statistical office Istat said Thursday. It follows Eur 3.39 billion deficit in January.

Exports rose 7.3% year-on-year to Eur 25.18 billion and imports grew 12.9% to Eur 27.51 billion.

The seasonally adjusted trade deficit was Eur 1.57 billion, with exports rising 2.5% month-on-month and imports growing 3.6%.

Unadjusted trade deficit with EU countries stood at Eur 710 million. Exports to this region rose 11%, while imports grew 14.9%.

Italy's unadjusted non-EU trade deficit logged Eur 1.62 billion, while seasonally adjusted deficit was Eur 1.09 billion.

GREECE

Athen's Athex Composite ended the week on 1,995.24, off 1.64% on the session.

The pension bill which will be unveiled at a cabinet meeting includes new provisions, including forms of flexible work, pension rights, wages, labour relations and union rights. Main opposition New Democracy party dismissed the measures are fragmentary, while SYRIZA (Coalition of the Radical Left) spoke of medieval working conditions.

Employment Ministry officials claimed that amendments and necessary adjustments could be made.

Greece's Economy, Competitiveness and Shipping Minister Louka Katseli on Thursday met with the head of European Investment Fund (EIF) of the European Investment Bank, Richard Pelly and discussed ways to expand cooperation and promoting new products to support small- and medium-sized enterprises and to ensuring liquidity in the Greek market, a program called JEREMIE (Joint Eurpoean Resources for Micro to Medium Enterprises).

Greece sold Eur 1.56 billion worth Treasury bills on Tuesday in an oversubscribed auction held after the Eurozone leaders offered aid for the debt-stricken country over the weekend.

The country raised more than the Eur 1.2 billion it expected to accumulate. However, economists continue to expect that the county may be forced to seek support from Eurozone.

The Greek public debt management agency sold Eur 780 million of the 52-week T-bill at an average yield of 4.85%, up from 2.20% in a previous auction held on January 12. Further, it sold Eur 780 million of 26-week T-bill at an average yield 4.55%, up from 1.38% in the previous auction.

The bid-to-cover ratio was 7.67 times for the 26-week bills while it was 6.54 times for the 52-week bills.

Finance Ministers of the 16-nation Eurozone agreed on Sunday to provide up to Eur 30 billion Euros in emergency loans at below-market interest rates to Greece if the country requires them. The aid will also involve the International Monetary Fund, which will make a further 10 billion Euros available to Athens this year. The development was widely expected to boost investor confidence.

Prime Minister George Papandreou needs to raise Eur 11.6 billion by the end of next month to cover maturing debt. This is part of about Eur 54 billion required for the full year to cover debt and budget needs.