The pan-European Dow Jones Stoxx 600 index gained 1.1% to 237.70.

Miners led the way, as shares of BHP Billiton climbed 1.7% and Rio Tinto rose 1.8%.

Overall, the French CAC-40 index rose 1.2% to 3,693.14, the German DAX index climbed 0.9% to 5,517.35 and the UK's FTSE 100 index gained 0.8% to 4,908.90.

German stocks climbed for the first time in three days, sending the DAX Index to a weekly gain, as companies from Dell Inc. to L'Oreal SA reported earnings that beat analysts' estimates and metal prices advanced.

Beiersdorf AG jumped 2.9% as L'Oreal reported a smaller-than-estimated earnings decline and forecast a recovery, prompting upgrades from three banks. ThyssenKrupp AG and Salzgitter AG, Germany's biggest steelmakers, advanced at least 1.2%. Volkswagen AG declined for a fifth straight week.

The benchmark DAX Index added 0.9% to 5,517.35, extending its weekly gain to 1%. The measure has rallied 51% since March 6 as companies worldwide from Goldman Sachs Group Inc. to Bayer AG posted better- than-projected earnings and economic data signaled improvement. The broader HDAX Index also advanced 0.9% Friday.

German stocks extended gains after a report showed European confidence in the economic outlook increased twice as much as economists forecast in August. An index of executive and consumer sentiment in the 16 nations that use the Euro rose to 80.6, the highest since October, from 76 in July, the European Commission in Brussels said Friday. Economists had predicted a two-point increase to 78, according to the median of 29 estimates.

Beiersdorf, the maker of adhesives and skin care products, climbed 2.9% to 36.24 Euros. L'Oreal, the world's largest cosmetics maker, said operating profit fell 8.3% to 1.37 billion Euros ($1.96 billion) in the six months through June. Oddo Securities, Bank of America Corp. and UBS AG all upgraded the stock.

ThyssenKrupp gained 2.5% to 24.28 Euros as metal prices rose in London. Smaller competitor Salzgitter climbed 1.2% to 68.00 Euros. Steelmakers are resuming production at mills from China to Russia and the US as the industry pulls out of its worst slump since World War II.

Commerzbank AG, Germany's second-biggest bank, surged 7.2% to 6.53 Euros. The German government currently has no plans to cut its stake in the bank, Finance Ministry spokesman Oliver Heyder-Rentsch said Friday. The Swiss government sold its 6 billion-Swiss franc ($5.6 billion) investment in UBS AG last week.

MAN SE, Europe's third-largest truckmaker, rallied 2.7% to 53.88 Euros. The company expects 50% of sales from emerging economies in the next five years, Chairman Hakan Samuelsson said in New Delhi Friday. The company gets about 25% of its revenue from emerging markets currently, Samuelsson said.

BASF SE, the world's biggest chemical company, followed European chemicals shares higher, adding 1.8% to 36.96 Euros. The company named Saori Dubourg as head of its regional functions and country management Asia Pacific.

Bayer AG added 1.5% to 42.97 Euros. The drugmaker's material science unit will reduce costs by moving its research center in Uerdingen, Germany to a site in Leverkusen, Rheinische Post said, citing Guenter Hilken, the company's head of polycarbonates.

Siemens AG, Europe's biggest engineering company, rallied 1.3% to 61.03 Euros. The company is investing $15 million Euros in Arava Power Company, an Israeli solar plant developer, and securing a 40% stake.

Infineon Technologies AG increased 4.2% to 3.51 Euros. Intel Corp., the world's biggest chipmaker, raised its sales forecast for this quarter, adding to evidence that computer demand is recovering. Dell Inc., the world's second- biggest maker of personal computers, reported profit and revenue Thursday that topped analysts' estimates.

Volkswagen, which has slumped 40% since Aug. 14, when Porsche SE said Qatar will buy a stake and take over most of the company's options for Volkswagen shares, lost 2.4% to 135.60 Euros. The company's preferred stock is overtaking its common shares for investors as Qatar prepares to exercise options that may reduce the stock's free float to less than 10%.

Praktiker AG rallied 5.7% to 9.24 Euros, a seventh straight advance. Germany's second-biggest home- improvement retailer was raised to "overweight" from "neutral" at JPMorgan Chase & Co.

France's CAC 40 Index advanced 44.61, or 1.2%, to 3,693.14, taking its weekly gain to 2.1%. The SBF 120 Index also rose 1.2% to 2,687.10 Friday.

Aeroports de Paris added 1.49 Euros, or 2.5%, to 61.16, reversing Thursday's 1.4% decline. The operator of the French capital's Roissy-Charles de Gaulle and Orly airports said net income rose 1.3% to 127.3 million Euros ($182.8 million) in the first half.

Bouygues surged 2.94 Euros, or 9.1%, to 35.10 Euros, the highest in 11 months. The builder and mobile phone operator increased its sales forecast for 2009, helped by a "slight" improvement in the outlook for its construction business.

Carrefour rose 1.45 Euros, or 4.6%, to 33.10 Euros. Europe's biggest retailer confirmed its full-year targets and reported a first-half net loss of 58.1 million Euros after writing down the value of assets in Italy and lowering French food prices to keep cash-strapped shoppers from defecting to rivals. The net loss was in line with analysts' estimates.

Euler Hermes soared 2.96 Euros, or 6.7%, to 47.46. JPMorgan Chase & Co. initiated coverage of the world's largest credit insurer with an "overweight" recommendation and a price estimate of 65 Euros.

Hermes International slipped 1.05 Euros, or 1%, to 103.00 Euros, paring three days of gains. The maker of Birkin handbags said first-half net income fell 7% to 125.4 million Euros.

JCDecaux added 48 cents, or 3.1%, to 15.68 Euros, a second day of gains. Credit Suisse Group AG upgraded the world's second-largest seller of outdoor ads to "neutral" from "underperform."

L'Oreal soared 4.81 Euros, or 7.4%, to 69.50, the steepest climb in nine months. The world's largest cosmetics maker said first-half profit fell 14% to 1.08 billion Euros as European and US shoppers bought less makeup and perfume.

UBS AG and Bank of America Corp. upgraded the stock to "neutral" from "sell" and to "buy" from "neutral," respectively.

Lagardere rose 2.16 Euros, or 7.6%, to 30.45 Euros, the highest level since February. France's largest publisher said first-half net income fell 19% to 129 million Euros, excluding returns from its stake in European Aeronautic Defence & Space Co. The company said operating results up to the end of June confirmed its "ability to meet" its full-year guidance.

Orco Property dropped 84 cents, or 7.6%, to 10.24 Euros, extending Thursday's 5.1% slide. The developer with much of its business in central and eastern Europe said its net loss for the first half of the year widened as the value of its real-estate portfolio fell 12%.

STMicroelectronics surged 68 cents, or 12%, to 6.17 Euros, the steepest climb since 2002. Dell Inc., the world's second-biggest maker of personal computers, topped profit and revenue estimates and Marvell Technology Group Ltd., the maker of chips for computers and mobile phones, reported per-share earnings that were 30% higher than analysts anticipated in the second quarter.

Separately Bank of America increased its price estimate on Europe's largest semiconductor maker to 7 Euros from 6 Euros and reiterated a "buy" recommendation.

Suez Environnement rose 18 cents, or 1.2%, to 14.50 Euros, paring Thursday's drop. Morgan Stanley lifted its recommendation on Europe's second-biggest water company to "overweight" from "equal-weight."

BELGIUM
 
In Brussels the Bel 20 ended Friday at 2,393.66, gains of 0.75% on the day.

Shares in Tessenderlo slipped as much as 5.0% after the Belgian chemicals and plastics group reports a worse-than-expected second-quarter operating loss late on Thursday and says it sees no market recovery yet.

The figures were hit by large provisions for plastics restructuring and inventory writedowns.

The shares fell to a low of 24.25 Euros in early trading and were the weakest in Belgium's mid-cap index.
 
Shares in Omega Pharma jumped more than 16% to hit a seven-month high after the Belgian health products distributor reports a first-half core profit above expectations and says that demand for its products is picking up lightly in most countries.

ING increases its rating to "buy" from "hold" and Bank Degroof to "accumulate" from "hold".

Fortis, the insurer that sold its banking businesses in October to avert a collapse, reported a first-half profit, helped by proceeds from a divestment.
 
Net income amounted to 886 million Euros ($1.26 billion), Fortis, based in Brussels and the Dutch city of Utrecht, said Friday in a statement. The insurer had a 697 million-Euro gain on the sale of 25% of AG Insurance NV, Belgium's biggest life insurer, to Paris-based BNP Paribas SA.

Fortis, Belgium's biggest financial-services company before it was forced to sell most of its assets last year because of the credit crisis, said it will publish the results of a review on Sept. 25 that aims to streamline the organization. The company has cut jobs at its headquarters and repurchased debt to lower costs since emerging from its breakup as an insurer.

Amsterdam's AEX closed out the week 300.20 - up 1.1% Friday.

Heineken NV, the world's third- largest brewer, reported a 20% gain in first-half profit that beat analysts' estimates on cost savings and higher prices.

Net income climbed to 489 million Euros ($699 million) from 407 million Euros a year earlier, the Amsterdam-based company said Friday. The average estimate compiled by Bloomberg was 425 million Euros. Heineken rose as much as 9.3% in Amsterdam trading, the steepest intraday advance in 10 months.

The maker of Amstel and the US's Heineken Premium Light reduced expenses by 50 million Euros in the first half under its so-called Total Cost Management program, which has shed jobs in the US and Europe and culled warehouses and trucks globally. Heineken also increased prices in markets from the US to eastern Europe to offset shrinking consumption.

Dutch retail property group Eurocommercial Properties met forecasts with a 4.3% rise in annual operating profit and said the value of its portfolio had fallen 8.8% over the year.

Investment writedowns stood at 208 million Euros ($299 million) at the end-June finish to its fiscal year, up from 105 million at the end of March, ECP said on Friday.

It made a 2008-09 operating profit of 65.1 million Euros.

Shares in ECP, which manages around 2 billion Euros in property, mainly in France, Sweden and Italy, were up 1.2% at 26.9150 Euros.

Dutch oil and chemicals storage company Royal Vopak raised its core profit outlook after strong demand and capacity expansion drove profit growth in the first half.

The revised outlook assumed a 95 capacity utilisation rate for the rest of the year, finance director Jack de Kreij said in an interview on Friday.

Vopak, which stores and handles liquid and gaseous chemical and oil products, now expects 2009 earnings before interest, tax, depreciation and amortisation (EBITDA), excluding exceptionals, of about 495 million Euros ($711 million), up from at least 450 million.

Its shares, which had risen about 70% since the start of the year, were up 2.5% at 46.65 Euros.
 
SWITZERLAND

The SMI in Zurich finished the week on 6,211.58 - up 0.69% for the day.

The Swiss economy grew at a faster pace last year than previously thought, revised data showed on Friday.

Swiss gross domestic product grew by 1.8% in 2008, the Federal Statistics Office said, revising the growth rate up from an originally reported 1.6%.

The statistics office also revised growth for 2007 up to 3.6% from 3.3%.

The Swiss economy is expected to shrink by some 3% in 2009, which would be the worst drop in over 30 years.

The economy shrank by 0.8% on the quarter in the first three months of 2009. Second quarter data is due next week.

In a rare sign of confidence in the struggling insurance sector, Baloise Holding Thursday reaffirmed its medium-term goals and said it saw signs of rising premiums in Europe, even as the Swiss firm's first-half net profit edged down 11%.

Baloise's bullish outlook, which contrasts sharply to bearish comments made by peers such as Swiss Life Holding and industry watchers such as Fitch Ratings, comes as many life and non-life insurers are being hurt by jittery financial markets and slow consumer demand in the economic downturn.

Rating agency Moody's Investors Service in mid-August said that conditions in the industry, both in the life and non-life segment, remain "challenging" and that many insurers are in need of repairing their balance sheet by tapping fresh funds before the industry can recover.
 
Since the start of the recession, many insurers have been forced to cut premiums, the prices for products such as car insurance or fire-protection policies. However, due to higher claims, Baloise said the company is now able to ask for higher prices again.

Drug discovery company Mondobiotech is listing on the Swiss stock exchange, and plans to issue new shares on a regular basis to ensure its future funding, it said on Wednesday.

Mondobiotech, based in Stans in central Switzerland, focuses on discovering new treatments for rare and neglected diseases, then licenses those drug candidates to third parties.

The company gave no details of how much it hopes to raise from going public.

It is the first health care company to list on the Swiss exchange since Addex in 2007, though there are other potential offerings in the wings.

Vienna's ATX managed sharp gains Friday, up 2.23% to finish the week at 2,554.82.

German airline Deutsche Lufthansa AG said Friday the European Commission has approved its takeover of Austrian Airlines Group, allowing it start integrating the company in September.

Cologne-based Lufthansa is taking over about 42% of the shares of Austrian Airlines owned by the government for about Euro336,000 ($480,000), according to the European Commission.

The commission also approved a Euro500 million government restructuring program, which Lufthansa has said in the past would be necessary to reduce Austrian's debt.

Lufthansa also made a Euro166 million offer for the free floating Austrian shares and has more than the necessary 75% for the takeover, Lufthansa said.

Lufthansa said it would extend the Austrian share purchase by about another week, but then envisions a squeeze out of the remaining minority shareholders.

The EU made its decision based on the condition that Lufthansa and Austrian give up some of their flights on the routes between Vienna and Frankfurt, Munich, Stuttgart, Cologne and Brussels for competition reasons.

Lufthansa has been busy consolidating the airline industry, and is now Europe's largest airline by sales ahead of AirFrance-KLM.

Austrian steelmaker Voestalpine is phasing out shorter working hours for around 3,500 staff at its biggest site as capacity rises, but it reiterated there was still the risk of an economic slump in 2010.

Voestalpine put around a third of its staff in its steelmaking branch on shorter working hours at the beginning of 2009 as demand for steel products dried up and orders slumped as the global slowdown set in.

The company said on Friday that the workers at its Linz plant would go back on to full working hours from the beginning of September because the environment had improved. Its shares were trading over 5% higher by 0800 GMT at 22.26 Euros, outperforming a 1.7% rise in the DJ Stoxx Basic Resources index.

Austria's economy has rallied in 2009, helping to boost returns of the iShares MSCI Austria Investable Market Index Fund (EWO) to more than 61% year to date.

EWO is among the popular iShares MSCI funds. This indexing method allows iShares to take "slices" of the MSCI index to offer individual country funds.

EWO tracks the MSCI Austria Investable Market Index, which contains publicly traded securities in the Austrian market.

The fund uses a capitalization weighting strategy, so Austria's largest companies are included in EWO's basket.

The OMX 30 in Stockholm ended a volatile week at 919.91, up 1.99% for Friday.

The Swedish stock exchange is set to agree on giving shareholders the right to the same price in a takeover, regardless of the amount of voting power commanded by the share, the bourse said on Wednesday.

Nasdaq OMX, the owner of the Stockholm bourse, will announce a decision on possible new rules on Thursday.

The Swedish system allows companies to have different series of shares which usually give the shareholder of a class A stock greater voting power than the owner of a B share.

A shares and B shares would get the same price in the case of an offer - adding that a formal decision has not yet been made.

But according to custom, the bourse follows the recommendation of the Swedish Industry and Commerce Stock Exchange Committee.

The committee has suggested the changes as a part of a bigger package of regulatory changes, according to the bourse.

The issue of different pricing on series A and series B stocks became a hot topic in Sweden in 2007 when the Icelandic investment firm Milestone placed a cash bid on the financial group Invik.

Milestone offered 253 Swedish Crowns ($35.97) per A share, but only 230 Crowns for a class B share, causing a storm of discontent among shareholders.

Under the proposed new rules, a bidder could be allowed set aside the rules on equal treatment in certain cases. However, it would need to offer an equal premium on the past share price performance for both kinds of stock.

World number two truck maker Volvo AB said its truck shipments fell 54% year-on-year in July as the economic downturn weighed on demand for commercial vehicles across the globe.

Volvo, which sells trucks under brands such as Renault, Nissan Diesel and Mack as well as its own name, said in a statement on Thursday deliveries fell 66% in Europe, its biggest market, and shrank 46% in North America.

In Asia, Volvo's truck deliveries were down 42% from a year ago.

Shares in the company were down 1.2% to 63 Crowns.

Finnish insurer Sampo said Thursday it has applied for a license to increase its ownership above 20% in Nordic financial group Nordea Bank AB in a move that would make it the bank's largest shareholder.

Sampo said it will submit an application to the Swedish Financial Supervisory Authority to raise its stake above 20% from 19.45% held on Aug. 25.

The insurer has gradually increased its stake in Swedish-based Nordea and said it intends to consolidate the bank into its account once exceeding the 20% threshold.

The Swedish state owns close to 19.8% in the bank, but has long sought to divest its holding as part of a privatization drive, which was put on hold after the financial crisis escalated this autumn.

Sampo said it will announce the decision from the FSA once it receives it.

Copenhagen's OMX 20 finished Friday up 1.39% at 339.46.

Denmark's central bank trimmed its key lending interest rate by 10 basis points to 1.35% on Thursday to ease upward pressure on the Crown and narrow the spread to the Euro zone.

Growth in the foreign-exchange reserves of the central bank, whose monetary policy aims to keep the Crown within a 2.25% band to the Euro, sometimes triggers interest rate changes.

'The reduction is a consequence of purchases of foreign exchange in the market,' Nationalbanken said in a statement, giving the same reason for the cut as it did when it last trimmed the lending rate by 10 bps on Aug. 13.

The bank gave no other explanation for the cut, which narrowed the gap to the ECB's refinancing rate to 35 basis points, and its spokesman Karsten Biltoft declined to comment further.

The bank's foreign exchange reserves climbed by 6.2 billion Crowns to 336.4 billion in July, and the bank is scheduled to release its August reserves figures on Sept. 2.

The bank's forex reserves have risen every month since October 2008 when they fell to 132.4 billion Crowns.

The Danish Crown softened only marginally on the news, 7.4436 to the Euro by 1438 GMT from 7.4433 just before the announcement.

The Crown has firmed from levels around 7.45 to the Euro seen in early May and from a 2009 trough of 7.4567 in March.

The bank's monetary policy aims to keep the currency steady around its central parity of 7.46038 per Euro and between 7.2925 and 7.6282 Crowns.

The cut was the Danish central bank's 10th since it began easing from 5.50% in November 2008 as the global financial crisis deepened.

It was the bank's third independent rate cut -- two 10 bps cuts in August and one 10 bps reduction in June -- since May when it last lowered rates simultaneously with the ECB.

The Board of Directors of Ossur Friday decided to apply for listing of the Company's shares on NASDAQ OMX Copenhagen.

Ossur's shares will continue to be listed on NASDAQ OMX Iceland as they have been since 1999.

An additional listing on NASDAQ OMX Copenhagen is believed to make strong strategic sense for the Company. Copenhagen offers access to the international investor community and is a recognized market for healthcare companies.

Listing and compliance requirements are similar in Denmark and Iceland and both exchanges are part of the NASDAQ OMX Nordic group.

The OMX Helsinki followed regional leads and closed out the week at 6,305.56, up 1.62% for the session.

It's official - Finland's economy is in deep recession!

Finland grew strongly from 2004 to 2007, with 3.9% average growth - way above the Euro area. But growth in 2008 dropped to 0.92%. High inflation, the credit crunch, and lower demand for Finland's exports, which account for around 45% of GDP, squeezed the economy. 

Export volumes contracted 25.5% y-o-y in Q1 2009. Because of this, economy is expected to shrink by as much as 5.7% in 2009. Unemployment, now 9.1%, is expected to be over 10% by the end of 2009.

Finland's long housing boom was encouraged by a decade of under-building. Less than 30,000 dwellings were completed annually from 1994 to 1999, down on 40,000 units annually from 1983 to 1991 (with a peak level of 65,397 units in 1990).

Around 58% of dwellings are owner-occupied, 32% are for rental while other forms of tenure account for the remaining 10%. Around 40% of new dwellings in Finland are bought by housing associations, and 35% by private individuals.

Finland's private rental market is still relatively subdued, with about half of rental dwellings (about 800,000 units) receiving some form of government subsidy or support. Even with the complete deregulation of the private rental market in 1995, private rents are still distorted, due to the large social housing sector. Government subsidized rents are 25% lower than private rents in Helsinki, and 15% cheaper for Finland as a whole.

After the initial rapid rent increases after rent liberalization, recent rental growth has been slow. From 2001 to 2007, house prices in Finland rose by around 50%, while private rents trailed with growth of only 17%. In Helsinki, house prices rose 55% while private rents rose by only 12% over the same period. This has led to relatively low rental yields in Finland, ranging from 3.7% to 5.8% per annum in August 2008, according to the Global Property Guide.

In 2008, private rents rose 4.06% y-o-y, while government-subsidized rents rose by 5.3%.

In 2009 low inflation and weak demand, and a larger supply of units as home sellers lease out unsold second houses, are expected to moderate rent rises.

By June 2009 annual inflation was only 0.1%, raising concerns of a deflationary cycle similar to Japan's. In response, the government has increased spending and cut taxes, pushing the budget into deficit for the first time since 1997. This year's deficit is expected to be 2.5% of GDP.

Mobile phone maker Nokia Corporation (NOK) was initiated as a "Sell" by analysts at MKM Partners on Thursday.

The analyst also set a $10 price target on the shares, which closed at $13.13 on Wednesday. MKM cited Nokia's disappointing near-term pricing for the negative rating.

MKM said "We have been avoiding shares of NOK since our early June coverage began, when shares were trading at the $26 level."

"The company has a dividend yield of 3.96%, based on last night's closing price of $13.13. The stock has technical support in the $12-13 price area. If the shares can firm up, we see overhead resistance around the $18 price level. We would remain on the sidelines for now."

Oslo's OBX ended Friday at 278.44 - up 1.81% for the day.

Shares in Norwegian oil company Rocksource tumbled 6.6% Tuesday after it revised down its 2009 oil production target on a sharper than expected fall in US output and swung to a second quarter net loss on lower revenues.

The company also announced its chairman Dag Dvergsten had stepped down to focus on his position as a senior adviser for the company.

Rocksource traded down NOK0.27 or 6.6% to NOK3.82, outstripping the 0.52% decline on Oslo's OSEBX index.

The company has faced a number of technical challenges at its onshore US production wells, forcing it to cut its 2009 production target to 1,300 barrels of oil equivalents a day, from 1,700 boe/day previously.

It had previously warned of the risk of a downgrade.

Rocksource said production challenges, combined with low gas prices, led to a drop in revenues in the second quarter, pushing it to a net loss of NOK39.3 million compared to a profit of NOK41.8 million in the same period a year ago.

Revenue in the period tumbled to NOK22.6 million from NOK90.0 million a year ago, while operating expenses increased to NOK95.1 million from NOK77.5 million in the second quarter of 2008.

Average daily production in the quarter was 1,422 boe/day, down from 1,707 boe/day in the first quarter after wells were shut in to replace production tubing and allow for stimulation.

Oslo-listed oilfield services group Prosafe posted a forecast-lagging 25% drop in second-quarter profit on Thursday, but said it expected good long-term demand in the accommodation rig market.

Operating profit fell to $47 million in April-June from $63 million a year earlier, matching the trend of many of its oil services sector peers as oil prices fell but lagging an average forecast of $50 million in a Reuters poll of 12 analysts.

Prosafe, which owns 12 accommodation rigs or "flotels" for workers on offshore fields, declared an interim dividend of 0.35 Crowns per share for the second-quarter.

Norwegian oil rig company Seadrill reported a bigger-than-expected rise in second-quarter operating profit on Thursday and said it was seeking to list its shares on the New York Stock Exchange next year.

"As alluded to in the second quarter report last year and in response to the growth of the company, the board has decided to seek a US listing," Seadrill said in a statement. It said it was targeting the listing in the first quarter of 2010.

Operating profit rose in the three months to end-June to $339 million from $212 million a year ago, with the increase mainly due to a full quarter in operation for four new rigs as well as improved overall utilization.

Estimates ranged between $253 million and $377 million, with an average of $320 million.

The Ibex in Madrid closed out another volatile week at 11,442.70, an uptick of 0.76% for the days' proceedings.

Spain's recession-hit economy shrank 1.1% in the second quarter, official data showed on Thursday, worse than the original estimate of 1.0%.

Compared with a year earlier, the economy contracted 4.2%, rather than 4.1%, according to final figures provided by the National Statistics Institute.

The second quarter marks the fourth consecutive contraction in the once booming economy. It shrank 1.9% in the first three months of the year, 1.0% in the last quarter of 2008 and 0.3% in the third quarter of 2008.
 
Spain's economy has proved especially vulnerable to the global credit crunch because growth relied heavily on credit-fueled domestic demand and a property boom boosted by easy access to loans.

Iberia Lineas Aereas de Espana Friday said it swung to a net loss in the second quarter, hit by falling demand for air travel as the recession grips Spain.

The country's largest airline by sales reported a net loss of Eur72.8 million, after a Eur21.2 million net profit a year earlier.

Earnings before interest, tax, depreciation, amortization and aircraft rentals - Iberia's preferred measure of profitability - was Eur2.4 million, down from Eur135.4 million a year earlier, while revenue fell 22% to Eur1.07 billion.

The company has reduced domestic flights in favor of more lucrative long-haul flights, mostly to Latin America. This segment has also been hit by the international financial crisis, as well as the company's other strategic bet during Spain's boom years, an expanded business section.

Iberia has been adjusting to the weaker demand for air travel by slashing routes and frequencies as well as operating smaller aircraft on some routes.
 
The company added it had accelerated capacity cuts to 6%, a deeper reduction than the 4.3% cut it had originally set out in its contingency plan last year.

To reach the cuts, Iberia said it would ground three more short and medium-haul aircraft and has delayed the delivery of new long-haul Airbus A-340-600 planes. Iberia said the combined reduction accounted for 10 aircraft.

The weaker economy in Spain is taking a toll on domestic demand, resulting in a drop in total occupancy rates - or passenger load factor - of 0.7 percentage points to 78.9% in the first half, in spite of the company's moves to adjust to the lower demand.

Operating costs fell 9.6% to Eur2.44 billion in the first half as the company scaled back operations and cut personnel and other costs.

Iberia has spent Eur580.1 million so far this year on fuel, down from Eur732.1 million in the first six months of 2008. The company said that the drop was due to a fall in oil prices, lower consumption of fuel as the company reduced capacity and hedges on the Dollar/Euro exchange rate.

Iberia and British Airways have maintained a long-standing code-sharing agreement and are negotiating the terms of a tie-up. Hopes of a merger were rekindled in July when Iberia named Antonio Vazquez as its new chairman.

The company's statement Friday gave no additional information about the planned merger.

The PSI General in Lisbon ended at 2,681.09, one of the few markets in Europe actually down - dropping 0.02% on the day.

Portugal's retail-heavy Sonae conglomerate reported on Tuesday a 38% fall in second-quarter net profit, hit by a drop in mall property prices, but said sales improved, allowing it to cautiously expect profitable growth.

Portugal's largest employer runs the Continente supermarket chain as well as domestic appliance, sporting goods and other megastore chains. It also has a telecommunications division and an international shopping mall development and management business.

"We remain cautious about the overall economy and the uncertain evolution of the markets where we operate," Sonae Chief Executive Officer Paulo Azevedo said in a statement, singling out competitive pressures in the retail and telecoms areas.

"Despite this caution, the resilience of the cash flows generated at almost all our businesses allows us to be confident in our ability to maintain our shareholder remuneration policy," Sonae said, also promising "profitable growth while building a strong market position."

While net profit fell to 7 million Euros ($10 million) from a year ago, it was a sharp improvement from the first quarter's loss of around 36 million Euros, as the pace of real estate depreciation decreased and sales improved, partly helped by Easter holidays falling in April this year.

Overall revenues rose 9% to 1.34 billion Euros and earnings before interest, taxes, depreciation and amortization jumped nearly 12% to 155 million Euros, slightly exceeding market expectations.

Portuguese pulp and paper group Portucel Soporcel is expected to follow its European counterparts and look to Brazil, Uruguay and Mozambique to set up factories, analysts cited by Portuguese news agency Lusa said.

This would be a long term project that aimed to boost Portucel Soporcel's organic growth, as the group "has been analysing several alternatives for its international expansion," in regions "where natural conditions provide high levels of forestry productivity."

According to the analysts cited, large international groups have already opened the way for these types of investment, notably Swedish-Finnish group Stora-Enso, which shares the Veracel pulp factory in Brazil with Aracruz and recently, in consortium with Chile's Arauco, acquired the forestry assets of Spain's Ence in Uruguay (around 110,000 hectares).

Italy's benchmark FTSE MIB Index gained 197.76, or 0.9%, to 22,672.54 in Milan. The gauge increased 3.5% this week.

Atlantia gained 34 cents, or 2.2%, to 15.69 Euros, the highest in more than two weeks. Intermonte Sim SpA reiterated a "buy" rating on Europe's largest toll-highway operator, citing "potential improvement in traffic." The brokerage said the stock "could be a good buying opportunity for a 3-6 month investment window."

Autogrill, the world's biggest manager of airport restaurants, retreated 19 cents, or 2.4%, to 7.74 Euros. "Some profit taking, coupled with the break of this week's low at 7.85 Euros, affected the shares," said Davide Manenti, head of research at Nuovi Investimenti Sim SpA.

Banca Italease SpA dropped 15 cents, or 6.4%, to 2.2 Euros. The Italian leasing company had a first- half loss of 160.4 million Euros ($230.3 million) and said a coupon on 150 million Euros of preferred securities due on Sept. 8 won't be paid. A shortfall in regulatory capital "negatively impacts the possibilities for developing Banca Italease's core business activity," the company said.

"Italease remains the single most important risk factor for Banco Popolare's shareholders," Credit Suisse Group AG said in a note Friday. Banco Popolare SC (BP IM), the first Italian bank to seek state aid during the financial crisis and Italease's main shareholder, fell 6.5 cents, or 1%, to 6.28 Euros. The lender said after the closing of the market that net income in the first half fell to 204 million Euros from 319 million Euros.

Banca Monte dei Paschi di Siena fell 4.7 cents, or 3.1%, to 1.49 Euros, ending a two-day gain. Italy's third-biggest bank said second-quarter net income totaled 31.5 million Euros, missing the 37.2 million-Euro average estimate of eight analysts surveyed by Bloomberg. Citigroup Inc. kept a "sell" rating, saying "bad debt provisions were a touch higher."

Banca Akros cut its recommendation on the stock to "sell" from "reduce."

Brembo SpA advanced 19 cents, or 3.5%, to 5.56 Euros. The world's largest manufacturer of disk brakes said in a statement that "the first signs of recovery began to appear in the second quarter," allowing the company to post net income of 6.5 million Euros in the three-month period.

Exane BNP Paribas increased its price estimate to 5.4 Euros from 2.8 Euros. The brokerage kept an "underperform" rating. UBS AG reiterated a "neutral" recommendation, while lifting its price projection to 5.2 Euros from 4.7 Euros.

Bulgari SpA fell for a third day, losing 7.5 cents, or 1.4%, to 5.13 Euros. Equita Sim SpA downgraded the world's third-largest jeweler to "hold" and removed the stock from its "main portfolio."

Hera SpA dropped 4.7 cents, or 2.6%, to 1.74 Euros, the biggest loss in almost three weeks. Intermonte Sim SpA downgraded the municipal utility in the Bologna region in Italy to "underperform" from "neutral."

Immobiliare Grande Distribuzione added 9 cents, or 6.5%, to 1.48 Euros, paring a 7.7% loss Thursday. The owner of shopping centers had its price estimate increased to 1.65 Euros from 1.45 Euros at Cheuvreux. The brokerage reiterated an "outperform" rating.

Impregilo added 4 cents, or 1.4%, to 2.89 Euros. Italy's biggest builder posted first-half net income of 55.3 million Euros on sales of 1.43 billion Euros.

The company doesn't see difficulties in meeting 2009 targets, Impregilo said in a stock-exchange statement Friday.

Intesa Sanpaolo rose for a seventh day, adding 7.25 cents, or 2.4%, to 3.06 Euros. Italy's second- biggest bank said second-quarter profit fell 62%, beating analysts' estimates, as it put aside more money to cover bad loans. UBS AG increased its price estimate to 3.3 Euros from 2.8 Euros after the results and reiterated a "buy" rating.

Italcementi gained for the first time in four days, adding 13 cents, or 1.3%, to 10.52 Euros. Bank of America Corp. increased its price estimate on Italy's largest cement maker to 8.2 Euros from 6.1 Euros, leaving an "underperform" rating unchanged.

Saipem, Europe's largest oil-field services contractor by market value, gained 19 cents, or 1%, to 18.93 Euros. Crude oil rose for a second day, rising above $73 a barrel, as advancing equity indexes boosted confidence that the global economy will rebound.

Tenaris, the world's biggest maker of seamless steel tubes for pipelines, increased 12 cents, or 1.2%, to 10.39 Euros.

STMicroelectronics climbed 67 cents, or 12%, to 6.15 Euros, the steepest increase since October 2002. Intel Corp., the world's biggest chipmaker, raised its sales forecast for this quarter, adding to evidence that computer demand is recovering.

Separately Bank of America Corp. increased its price estimate on Europe's largest semiconductor maker to 7 Euros from 6 Euros and reiterated a "buy" recommendation.

Tiscali gained 3.1 cents, or 9.7%, to 35.15 cents. The Italian Internet provider announced a reverse stock split at a ratio of one share for every 10 existing shares. The reverse split is expected to be effective by the end of September, Tiscali said in a note. The company also said that its first-half loss widened to 402.9 million Euros after the sale of assets in the UK

In Athens the Athens Composite (Athex) closed out Friday at 2,540.40 - only the second European market to drop on the day; down 0.16%.

Growth in Greek household borrowing slowed to an annual 5.2% in July from 6.2% in June, in line with broader Euro zone trends, the country's central bank said on Thursday.

A sharp slowdown in economic activity coupled with tighter credit conditions are eating into the loan growth that fuelled consumption and economic expansion in Greece and boosted bank earnings.

Greece's economy, about 2.5% of the Euro zone, may slip into recession in 2009 after years of 4% growth, the central bank has said, a view shared by the EU Commission, the IMF and the OECD.

The Bank of Greece said household loan balances grew by 383 million Euros in July. Mortgages grew by a slower 5.2% annual pace or 329 million Euros, from 6.0% in June.

Consumer credit expanded by 5.8%, down from 7.1% in June and 16% in December.

The trend was in line with decelerating private sector loan growth in the Euro zone, where credit to households and businesses in the 16-nation region fell to a record slow annual pace of 0.6% in July.

Greek authorities have sought to keep the pace of credit expansion above 10% this year and came up with a 28 billion Euro bank support package to keep the economy adequately funded.

But the pace of credit expansion to the private sector is now seen slowing to 5 to 6% by the end of the year, Greece's central bank has said.

The Bank of Greece said credit to business also slowed to an annual 7.9% clip in July from 8.6% in June.
 
Titan Cement Thursday said that second-quarter net profit fell 48% as building activity slumped in most of its key markets, and it warned of further weakness ahead.

"The outlook for the remainder of 2009 is influenced by the global financial crisis," the company said in a statement. "Prevailing market trends in the regions where the group operates are anticipated to continue throughout 2009."

For the three months to June 30, the company said net profit fell to Eur38.1 million from Eur73.3 million a year earlier hit by slowing demand for cement in Greece, the US and the Balkans. Revenue also fell, down 11.6% to Eur375.7 million from Eur424.9 million a year earlier.

However, the results are not directly comparable with year-earlier financial data because of two major acquisitions the company made in Turkey and Egypt early last year.

The second quarter figures were exactly in-line analysts' expectations of a 48% drop in net profit and an 11% decrease in revenue.

Eurobank EFG reported Thursday that Q2 net profit went up by 9% q-o-q to €88m.

On a first half net basis, net profit reached 169 mil. Euro, registering a 61% drop "on account of sharply higher provisions and in-line with market expectations," as Dow Jones Newswires notes.

Bank's Q2 net interest income expanded 8.5% q/q reaching 590 mil. Euro. Again, on H1 terms, it dropped 1.9% shaping at 1.13 bn Euro.

Organic profit almost doubled to €61m in 2Q09, from €33m in 1Q09 while group business loans expanded by 7.1% y-o-y and mortgages by 10.3% y-o-y, the bank said.

New loan disbursements to businesses and households in Greece exceeded €6bn in 1H09 with total deposits growing by 7.3% y-o-y and loans to deposits ratio further improving to 117%1 from 120% in 1Q09 and 122% at the end of 2008.