The FTSE Eurofirst 300 declined 2.1 per cent over the week to 963.56, its lowest level since 7 September.

European banks' ongoing efforts to raise capital will bolster indices over the next few weeks, Nomura said, noting that markets had in general responded positively to the cash calls.

Europe's Dow Jones Stoxx 600 Index slid 1.9 percent to 234.1, the lowest close in four weeks. The gauge extended its second straight weekly drop to 2 percent.

German stocks dropped for a fourth consecutive day, with the DAX Index extending its weekly drop, after US reports showed the US jobless rate rose to a 26- year high and factory unexpectedly fell.

Deutsche Bank AG and Commerzbank AG, Germany's largest banks, led declines as the European Union said bank losses could reach 400 billion Euros ($581 billion). Infineon Technologies AG and Siemens AG slid more than 2 percent.

The DAX sank 1.6 percent to 5,467.90, for the longest stretch of daily losses in a month. The benchmark measure dropped 2 percent this week after a six-month rally left it valued at about 45 times its companies' reported earnings as of Sept. 25, near the highest level since December 2003, according to weekly data. The broader HDAX Index lost 1.7 percent Friday.

Commerzbank, Germany's second-biggest bank, sank 9 percent to 7.64 Euros, leading declines among European lenders. Larger competitor Deutsche Bank fell 2.3 percent to 49.82 Euros.

A stress test of the European Union's biggest banks showed they could withstand an even deeper recession, though with losses, a report to EU finance chiefs showed.

Deutsche Postbank AG, which is part-owned by Deutsche Bank, lost 3.8 percent to 22.65 Euros. Chief Executive Officer Stefan Juette said it is uncertain whether the company will reach breakeven in the third quarter.

Infineon, Europe's second-largest maker of semiconductors, slumped 3.5 percent to 3.63 Euros. Sal. Oppenheim Jr. & Cie. KGaA cut its recommendation to "reduce" from "neutral" on the stock.

Separately, Volterra Semiconductor Corp. said a US District Court granted the company a preliminary injunction against Infineon, Infineon Technologies North America Corp. and Primarion Inc. in a patent infringement lawsuit.

Siemens, Europe's largest engineering company, declined 2.2 percent to 60.20 Euros. Deutsche Lufthansa AG, the region's second-biggest airline, dropped 1.8 percent to 11.53 Euros. Metro AG, Germany's largest retailer, retreated 3 percent to 36.50 Euros.

Arcandor dropped 6.7 percent to 22.4 cents. Friedrich Carl Janssen, chairman of the supervisory board of the retailer, has resigned, the Financial Times Deutschland reported, citing a letter written by Janssen to the supervisory board.

Pfleiderer lost 6.9 percent to 7.47 Euros, the lowest close in almost three weeks. Berenberg Bank downgraded the maker of laminate flooring to "hold" from "buy."

Q-Cells SE and Solarworld fell 3 percent to 12.15 Euros and 3.9 percent to 15.17 Euros, respectively. Renewable Energy Corp. ASA, a Norwegian maker of solar energy products, said contract adjustments for wafers will have an adverse effect on earnings next year.

Sky Deutschland dropped 5 percent to 3.26 Euros, closing at the lowest level since August. UBS AG downgraded Germany's biggest pay-television company to "neutral" from "buy."

Stada Arzneimittel decreased 3.4 percent to 17.96 Euros, a third decline this week. "We are still cautious on longer term pricing" for generic drugs and "sell Stada's recent strength," Credit Suisse wrote in a report on German health-care Friday. Stada is still up 6.3 percent this week.

France's CAC 40 Index declined 70.87, or 1.9 percent, to 3,649.90 in Paris. The measure dropped 2.4 percent this week. The SBF 120 Index retreated 2 percent to 2,669.58.

BNP Paribas, France's biggest bank, declined 3.3 percent to 50.77 Euros while Credit Agricole SA (ACA FP) dropped 1.9 percent to 13.61 Euros.

A stress test of the European Union's biggest banks showed they could withstand an even deeper recession, though with almost 400 billion Euros ($581 billion) in losses, a report to EU finance chiefs showed.

Electricite de France dropped 92.5 cents, or 2.3 percent, to 38.72 Euros. Europe's biggest generator said it is examining options regarding its UK distribution unit, citing a target to reduce debt.

PSA Peugeot Citroen slipped 70.5 cents, or 3.5 percent, to 19.67 Euros, extending the weekly decline to 6.5 percent. Europe's second-largest carmaker's director of brands Jean-Marc Gales told Radio Classique that the company had a 30 percent decline in German sales in September.

STMicroelectronics, Europe's largest semiconductor maker, fell 20.1 cents, or 3.2 percent, to 6.13 Euros, extending Thursday's 1.7 percent drop. The Philadelphia Semiconductor Index sank 4.8 percent Thursday, the steepest decline in almost five months.

Total declined 61 cents, or 1.5 percent, to 39.32 Euros, a fourth straight decline. Europe's third-largest oil company retreated as crude oil for November delivery dropped as much as 3.5 percent to $69.06 a barrel on the New York Mercantile Exchange.

Veolia Environnement sank 1.38 Euros, or 5.3 percent, to 24.45 Euros as Arnaud Joan, a Paris-based analyst at Kepler Capital Markets, lowered his 2009 earnings outlook for the world's biggest water utility.

The Bel 20 in Brussels closed the week at 2,415.96, a decline of 1.44% for the day.

The Belgian government has decided to take part in the capital enhancement initiative launched by the French bank BNP Paribas.

Since the Fortis debacle Belgium is BNP Paribas's second largest shareholder.
 
The operation should not burden the Belgian budget because as a shareholder Belgium has the right to purchase new shares at a reduced rate.

On Tuesday BNP Paribas announced it was creating Eur 4.3 billion worth of new shares. The bank hopes to use the money to repay the French state for public support it gave the bank at the time of the banking crisis.

When Fortis Bank collapsed it was sold to BNP Paribas. In return for its stake in the Belgian bank, BNP Paribas paid Belgium in its own shares.

Belgium could become the bank's biggest shareholder as a result of the operation to repay the French state.

The Belgian government has decided to take part in the capital enhancement to ensure its stake in the French bank is not diluted.

The opposition Flemish Socialist Party is not impressed by the move, accusing the federal administration of acting like an investors' club.

Meanwhile it has emerged that Emiel Van Broeckhoven will sit on the BNP Paribas board as Belgium's second representative. Prof Van Broeckhoven is a lecturer in applied economic sciences at Antwerp University.

Belgian-based financial group KBC said it would continue doing business in Central and Eastern Europe but it might sell a part of its non-core assets in Bulgaria and Romania.

KBC announced its plans in a restructuring plan submitted this week to the European Commission, Belgian press reported.

The plan stated; "The bank considers giving up the non-strategic actives it holds in Romania and Bulgaria. We already put out for sale the shares we have with the Slovakian bank NBL, but we could not find any buyer"

Belgian pharmaceutical group UCB raised 450 million Euros ($659.9 million) from a six-year convertible bond offer on Wednesday to refinance debt, a figure that could rise to 500 million Euros.

The initial conversion price will be 38.746 Euros per share, a premium of 35 percent to the volume-weighted average price of UCB's shares from launch to pricing, UCB said.

The Aex in Amsterdam finished Friday's session on 299.30, a sharp drop of 2.11% for Friday.

Dutch cable manufacturer Draka Holding NV said on Thursday it will issue 100 million Euros of shares, representing 20 percent of the company's issued share capital, in order to restructure and improve its finances.

Half of the offering of 8.12 million new shares has been taken up by Flint Beheers, one of Draka's largest shareholders. The rest is scheduled for an accelerated bookbuild offering starting on Friday, Draka said in a statement.

Draka is Europe's third-largest cable maker with operations in 30 countries in Europe, America and Asia.

Of the total proceeds, 75 million Euros will be used to "strengthen the company's financial position" Draka said, while the rest will be used for restructuring measures.

Additionally, Draka also secured a standby arrangement with ING Commercial Finance to sell up to 50 million Euros of its accounts receivables if necessary, within the next two years.

Late news Friday of a criminal investigation of a Tomtom employee for insider trading.

The investigation by Dutch public prosecutors, the financial services regulator AFM and tax authorities is focussed on a single employee and TomTom's Amsterdam offices were searched Thursday.

The seniority of the employee has not been disclosed although TomTom have stated it is not a board member and there was no evidence to support the claim that the employee had any 'insider information'.

TomTom is understood to be fully cooperating with the investigation.

Moody's Investors Service has Friday downgraded the rating of the Eur2 billion 8.75% Mandatory Convertible Securities (MCS) to B2 from Ba2. The rating has been placed on review for possiblefurther downgrade. The MCS were issued by Fortis Bank (Nederland) N.V.(FBN), Fortis SA/NV, Fortis N.V., and Fortis Bank SA/NV, but the coupons are served by FBN only.

The MCS, which are non-cumulative securities and include fully optional deferral features, will convert into a fixed number of shares in 2010.

The rating action on the MCS reflects the increasing potential for coupon deferrals in light of the ongoing discussion between the Dutch Ministry of Finance and the European Commission (EC) on the state aid packagesgranted to Dutch banks.

Friday's rating action also reflects the concernscited in Moody's press release entitled "Moody's sees broader impact on hybrid ratings triggered by EC's state aid reviews," published on 19 August 2009.

The Dutch state took over FBN (rated C-/A1/positive outlook/ Prime-1) on 3 October 2008. Moody's notes that the Netherlands has not injected anycapital into FBN, but the takeover may be considered by the EC as a form of support.

Furthermore, given the EC's scrutiny of coupons of hybrid securities and dividends being paid out of profits, Moody's believes that there is an increased risk that FBN may be advised to skip optional coupons on the MCS.

Zurich's SMI closed out the week at 6,150.17, a decline of 1.68% for the session.

Credit Suisse's solid performance during the financial crisis has left it in a position of capital strength that could allow it to make acquisitions and return capital to shareholders.

Chief Executive Brady Dougan told a Bank of America Merrill Lynch banking conference in London on Thursday its relatively strong position could allow it to make 'material dividend payments'.

He also said he saw opportunities for 'tactical' acquisitions and the Swiss bank had the capital for buys.

'We have good bandwidth to handle the integration of some of these businesses so we will look at that opportunistically,' he said, adding the bank would be 'prudent and careful'.

Asked if the bank might be interested in UBS's US wealth management operations, Dougan said he was not interested in private banking buys outside Switzerland, including the United States, although he did want to grow more in the US market.

Speculation has been rife about UBS's plans for its US wealth management unit Paine Webber and was stoked again on Tuesday after chief executive Oswald Gruebel was quoted as saying in the FT it is not a core part of the bank's operations.

However, Gruebel told staff in an internal memo obtained by Reuters on Thursday that the board was committed to the business and it was not for sale.

'We have had offers, but we have not taken any of them seriously,' he said.

UBS bought US brokerage Paine Webber in 2000 for about $10 billion and merged it into UBS Americas, its U.S wealth management subsidiary, but the financial crisis and a damaging US tax fraud probe has forced it to pare back the business.

Credit Suisse, which has overtaken UBS as Switzerland's largest bank in terms of market capitalisation, was able decline government aid in the crisis and has one of the strongest capital ratios in the industry.

'We believe that thanks to our strong platform... we can outgrow the market across all regions,' Dougan said, in a webcast of the presentation in London. 'We feel pretty good about where we are, stacking up against the competition.'

He said the bank's once struggling asset management business had the potential to make a significant contribution to earnings over time, now it was restored to profitability.

He added about a third of the bumper first-half revenues the investment bank business recorded as markets rebounded were at risk of a slowdown if the environment returned to normal.

Credit Suisse was well positioned amid tightening international bank regulation in the wake of the crisis as it has already adjusted its strategy as Switzerland had moved early to introduce stricter rules, Dougan said.

Top Swiss managers and executives have felt the pinch of the economic crisis on their pay packages, which have fallen by around one quarter, a study says.

Debate has been raging in Switzerland about executive salaries, which despite the drop remain high. Nevertheless, the survey rejected caps on compensation packages as counterproductive.

The third survey of Executive Compensation and Corporate Governance by consultants PricewaterhouseCoopers of Switzerland was based on figures from 2008 and released in Zurich on Wednesday.

It said that the average chief executive compensation for the 20 companies on the Swiss Market Index (SMI) of blue chips dropped by about 25 per cent to SFr6.9 million ($6.7 million).

It noted that the reduction was caused by a decline in variable compensation. For example, in SMI companies bonuses dropped by 50 per cent.

The average total payout for board chairmen or women of SMI companies also dropped by 29.6 per cent to SFr844,723.

In addition, as a consequence of plummeting share prices, some members of boards of directors and executive boards have suffered "significant losses" in wealth on their company shares.

Despite that, some managers are still pocketing very generous financial rewards. It was recently reported that Novartis CEO Daniel Vasella had taken home a salary plus benefits totalling SFr40.3 million last year.

The study notes that with the advent of the financial crisis, the political debate on compensation of top executives has become increasingly heated.

But it states that compensation can hardly be blamed as the main cause of the economic crisis.

The study also puts the blame on other factors such as high expectations of shareholders, corporate cultures encouraging excessive risk taking and inadequate regulatory frameworks.

While the main target of public criticism is the amount of compensation for top executives, it is only one part of the equation, the study finds.

"More important than that, however, is the structure and the combination of the different elements in total compensation," the survey says.

These include equity programmes, bonuses, base salary, pensions and social security, as well as fringe benefits.

In Vienna, the ATX finished the day at 2,486.61, huge declines of 3.56% for the session.

Erste Group Bank AG, Austria's biggest publicly traded bank, is weighing a share sale to raise more than 1 billion Euros ($1.45 billion), four people familiar with the matter said. The stock fell 6.4 percent in Vienna.

Erste is discussing a possible offering with at least four investment banks, including Goldman Sachs Group Inc. and JPMorgan Chase & Co., which arranged stock sales for the company in the past, said the people, who declined to be identified because the negotiations are private.

Vienna-based Erste received 1.2 billion Euros in state funds during the global financial crisis and it's slated to get 1 billion Euros in hybrid capital from the government before the end of the year. The bank, which recorded a drop in profit as economic growth in eastern Europe sputtered, has also raised 540 million Euros from investors.

Erste fell the most since June 22, declining 1.94 Euros, or 6.4 percent, to 28.60 Euros. Erste has risen 77 percent this year as markets rebounded. The shares are still down 18 percent from a year ago and 47 percent from two years ago.

Constantia Packaging BV said on Thursday it had offered Immoeast over 360 million Euros ($524.5 million) to settle a financial claim the Austrian real estate developer has against it.

Debtor Constantia said in a statement it had offered Immoeast a settlement of 164 million Euros in cash and over 200 million Euros in assets over a controversial bond. It did not specify the assets.

Immoeast, the emerging European arm of Immofinanz, has been struggling to cope with writedowns on Eastern European assets. Its shares fell on the news to trade down 3 percent at 4.10 Euros.

The controversial bond goes back to just before the financial crisis when Immoeast, Immofinanz and closely-held Austrian bank Constantia Privatbank were headed by the same Chief Executive and linked in a complex web of shareholdings and management contracts.

Immoeast has previously said that the 520 million Euro bond was guaranteed by Constantia BV, a Dutch vehicle that used to own Constantia Privatbank.

Since then, joint CEO Karl Petrikovics has resigned, the bank had to be taken over by Austria's five biggest banks in a government-orchestrated bailout last year, and prosecutors are investigating several players.

Stockholm's OMX ended the day and the week on 867.84, a drop of 1.2% for the day.

Never before have so many in one single case been charged for so many crimes in the history of Swedish financial market. The case starting Friday will also maybe be a win-or-die situation for the Swedish National Economic Crimes Bureau. 'The Cevian man', 'the Nordea man', 'the Luxembourg man', 'the poker pro', 'the Carnegie man' and 'the Morgan Stanley man'. These are the alias used by Swedish media about the suspects in the largest case of insider trading ever taken to a Swedish court. A group of financial analysts, investment bankers and stockbrokers with friends brought into trial at the Stockholm District Court Friday.

"What makes this case so special is the large amount of crimes. It's unique that a number of people agree to systematically commit insider trading and by that way create a fortune for themselves", says prosecutor Yngve Rydberg.

He describes a common case of insider trading: a director of the board notice that his own company is on its way to disaster and then sells his shares.

"But in this case 'the Cevian man' transfer information about the companies where he has insight, he does not trade himself, but in other companies he has no connection to", says Yngve Rydberg.

It is also unique for the police to through telephone surveillance get hold on SEK 3.5 million in cash. The confiscation was made in April 2007, at the same time there where discussion about closing the Swedish National Economic Crimes Bureau.

"There is no correlation. We know from the telephone surveillance that SEK 5 million was on its way from Switzerland to Sweden", Yngve Rydberg says to daily Dagens Nyheter.

The criminal charge covers insider trading in a number of companies, among else biotech company Biacore, retailer Lindex and telecom provider TeliaSonera. Two of the suspects is also charged for felony tax crimes.

"The prosecutor gives you the impression that all these people have made gigantic, fortunate, deals. But that's not the whole picture. If all deals are taken into account it shows that the profit is closer to normal", says Hans Strandberg, lawyer to one of the suspects.

All suspects claim to be innocent. The case is expected to go on until January next year.

Already from the start in 1998 the Swedish National Economic Crimes Bureau was controversial. When the Social Democratic government of the time decided that this agency should be created did some public debtors' questioned why there should be a special agency for this type of crime when all other forms of criminal activity is handled by the police.

Politicians' of the then centre-right political opposition thought the bureau, who is subordinated the Government Office and both a prosecutor office and a police authority, resulted in a splintered organisational structure who caused administrational problems and imprecise controlling.

Things did not become easier when there was severe problems to get the bureau running, because of problems with appointing a director and to recruit personal.

Now and then the bureau is questioned over what is an said to be a poor result. After having lost a number of high profiled cases the government two years ago openly spoke about abolishing the bureau. Then came this case.

Thus this is a win-or-die situation for the Swedish National Economic Crimes Bureau. Without any convictions in this case will it be hard for the government not to pull the plug.

Tandberg ASA's shares soared Thursday after the Norwegian video conferencing company said Cisco Systems has agreed to buy all of its shares for almost $3 billion in cash.

Cisco is offering NOK153.50 a share, valuing Tandberg's total share capital at NOK17.2 billion ($2.97 billion), and Tandberg said its board is unanimously supporting the deal.

"We believe that Cisco, with its breadth of expertise and proven track record of integrating acquisitions will be a strong owner of Tandberg's business," Tandberg Chief Executive Fredrik Halvorsen said in a statement. "Cisco's ownership will strengthen Tandberg's position to serve our customers and partners with even greater innovation, and to expand opportunities for our employees."

Tandberg, which reported revenue of $809 million in 2008, makes a range of video-conferencing products, including high-end systems that compete with Cisco's own products, and software.

SAS, the Scandinavian airline based in Stockholm, said Thursday that it had sold its 20 percent stake in British Midland, or BMI, to Lufthansa and an affiliate for 38 million Pounds ($61 million) up front, while additional payments may follow.

Lufthansa, the German airline, can now decide alone what it will do with the struggling British carrier, while SAS said it wanted to concentrate on what it considers its home markets in the Nordic region.

"These are the markets we know best, and where we have the best position," Vice President Sture Stolen of SAS said in an interview.

"It doesn't make sense for us to hold minority stakes in airlines all over Europe," he said, adding that "we have stakes in Spanair and Air Baltic, and we plan to exit those, too."

Lufthansa's affiliate will pay 19 million Pounds for shares that SAS holds in BMI, the second-largest carrier at Heathrow after British Airways, and the German airline will pay an additional 19 million Pounds for other rights held by SAS.

The Swedish airline could also receive more over the next two years, depending on BMI's profitability.

SAS first bought into BMI in 1989 and will continue to collabourate with it through the Star Alliance, a group of international airlines.

LHBD Holding, a British company one-third owned by Lufthansa, has held 80 percent of BMI shares since the start of July and will receive the remaining 20 percent once the transaction is completed. The deal is to be wrapped up Nov. 1, Lufthansa said.

Mr. Stolen said the move "gives Lufthansa much more freedom to do whatever they want to do."

The OMX in Helsinki closed Friday's session at 6,095.93, the decline of 2.55% being the worst performing market in Scandinavia.

Loss-making Finnish electronics firm Elcoteq said on Friday India's Videocon Industries Ltd would buy an equity stake in it, two days after it said plans for a similar deal with China's Kaifa collapsed.

Shares in the firm, which sank on Wednesday when the Kaifa cancellation was announced, were 26 percent higher at 1.36 Euros at one point Friday.

"(The size) is more or less the same as the previous announcement - 50 million Euros ($72.7 million)," Elcoteq Chief Financial Officer Mikko Puolakka told Reuters.

Elcoteq said it aimed end negotiations as soon as possible and close the deal by the end of the year.

But as with the proposed Kaifa investment, Elcoteq declined to say what stake founders Antti Piippo, Jorma Vanhanen and Henry Sjoman would keep should the Videocon deal be finalised. Due to two share series with different weightings the founders control majority of the votes.

"Our market cap is around 30-40 million Euros, so the investment must entail certain control over the company," Puolakka said.

Stora Enso has successfully issued a Eur 390 million seven-year bond under its EMTN (Euro Medium Term Note) programme. The seven-year maturity of the bond will lengthen Stora Enso's average debt maturity profile. The bond pays a floating coupon of Euribor +4.21% and there are no financial covenants. Sole Lead Manager for the deal was SEK Securities. 

"We decided to take advantage of improved market conditions and issued a bond at attractive levels to refinance our short-term maturities and enhance our maturity profile. The Group has a strong liquidity situation and many alternative sources of financing are available. We continue to manage our maturity profile proactively," says Jyrki Tammivuori, SVP Group Treasurer.

Stora Enso has a revolving credit facility of Eur 1.4 billion maturing in May 2012 fully undrawn and without any financial covenants.

Nokia declined 8.2 per cent to €9.51 on concerns that the iPhone's expanding network would eat into the the carrier's smartphone market share.

Nokia has bought Dopplr, a company that provides a social network for international travelers who want to meet up as their journeys cross paths.

The Finnish handset company announced the purchase of the privately held firm, which employs seven people in London and Helsinki offices, on Monday. The amount of money involved in the transaction has not been disclosed.

"Friday, we're thrilled to announce that Dopplr has been acquired by Nokia," Dopplr chief executive Marko Ahtisaari wrote in a blog post on Monday.

According to Ahtisaari, who used to work for Nokia as director of design strategy, the handset maker "shares [Dopplr's] vision of the Social Atlas, the idea that social location data can improve our experience of cities".

Over the past year or two, Nokia has been making a concerted push into the online services market, largely through acquisitions and the development of its Ovi applications platform. The Dopplr buy marks Nokia's first major acquisition since July, when it picked up the German contact aggregation and internet telephony firm Cellity.

The Dopplr team will be incorporated into Nokia's Services unit, where it will provide "know-how in creating internet-based communities and showing their journeys, experiences and tastes collectively on the web", Nokia said in a statement.

Like Sweden, Copenhagen's OMX ended the day at 325.49, down 1.92%.

Shares in Danish brewer Carlsberg fell sharply on Tuesday after media reports that the Russian government would propose a ban on beer sales at supermarkets and kiosks, market analysts said.

Earlier this month Russian President Dmitry Medvedvev told officials to find ways to curb alcohol abuse, including possible bans on the sale of alcohol in specific locations at certain times of the day.

Carlsberg shares were hit last Thursday after the Russian government proposed to triple excise tax by 2012.

On Tuesday, Carlsberg shares dropped as much as 4.6 percent to 359.75 crowns but pared losses to 3.4 percent at 364.25 crowns by 1435 GMT, underperforming a flat Copenhagen bourse's bluechip index.

A Carlsberg spokesman declined to comment on media reports that the Russian government would propose to ban sales of beer at supermarkets and kiosks.

'We only know about this from newspapers, so I have no comment on it,' Carlsberg spokesman Jens Peter Skaarup said.

Russia is a major market for Carlsberg, the world's fourth biggest brewer.

Nordea decreased the share price target on Danish real estate developer TK Development A/S to DKK 48 from DKK 67, but maintained the "buy" rating on the stock. 

Danish pharmaceutical company Novo Nordisk A/S said Wednesday its drug Victoza has been shown in a clinical study to be more efficient than a competing drug in improving diabetes patients' blood sugar control.

Data from the extension phase of the LEAD 6 study indicated that patients who switched to Victoza from Eli Lilly & Co.'s and Amylin.

The OBX in Oslo closed out the week at 281.68, a daily drop of 2.41%.

Norway's financial market watchdog lifted a ban on short-selling banking and insurance shares on Monday, as calmer market conditions ended the need for trading restrictions to prevent damaging volatility in financial stocks.

Several European countries such as Belgium and Austria have recently extended short-selling curbs, but Norway's Financial Supervisory Authority said it would no longer consider short selling of shares in financial institutions a breach of securities law.

"The market situation has changed and is now of such a nature that trading short in the shares ... in question is no longer considered on a general basis to contravene with the Securities Trading Act," the regulator said in a statement.

Many countries introduced measures last autumn to restrain or even ban short selling after the collapse of Lehman Brothers sparked heavy selling in financial shares. Britain in January ended its blanket ban on short-selling financials but required investors to disclose short positions.

The financial watchdog said on Oct. 8 last year it would prohibit short selling in financial shares on a temporary basis due to the financial market turmoil.

The ban had applied to shares in DnB NOR and Storebrand as well as shares and primary capital certificates in a number of smaller savings banks and insurance companies.

Norwegian Property ASA, the biggest owner of commercial real estate in Oslo's main financial district, plans to cut debt and may sell assets to ride out falling rents.

"We're no longer seeking to be such a highly geared company," Chief Financial Officer Mari Thjomoe said in an interview at her company's headquarters in Oslo. "At some point we will reach that lower debt level and will hopefully be even more attractive to investors."

Norwegian Property aims to reduce the loan-to-value ratio, or money borrowed as a proportion of fair market value, to between 60 percent and 65 percent from 76 percent. The investor in office buildings and hotels had total debt of 20.3 billion kroner ($3.5 billion) as of June 30.

The company was created in 2006 with the goal of becoming the Nordic region's largest publicly traded real-estate investor. Norwegian Property reported net losses for the past six quarters and scrapped a plan last year to sell Norgani Hotels ASA after an 11.1 billion-kroner bid from unidentified investors lapsed.

Norwegian Property owns 48 office buildings in its home country, as well as Norgani's 74 hotels across Scandinavia. The company's combined assets were valued at 24.7 billion kroner at the end of June.

"There can be good reasons for changing your portfolio by either buying or selling," Thjomoe, 46, said in the interview on Sept. 24. "We would always be open to good suggestions." The main focus will be to develop and improve the value of the company's real estate, she said.

This year, Norwegian Property has sold two buildings for a total of as much as 3 billion kroner, Thjomoe said. In 2008, the company divested eight properties.

"Obviously the value of the hotel and office properties has fallen," the CFO said. "It's more challenging to sell off portfolios right now than it would have been two years ago."

Until the market improves, Norwegian Property will try to trim debt by other means. The company didn't pay a dividend for 2008 and, under an agreement with its lenders, money distributed to shareholders in the years ahead will depend on a recovery in real-estate values.

Norwegian Property has already reduced debt by raising 1.5 billion kroner from share sales this year.

"The current gearing level is much more comfortable than it used to be," Thjomoe said. "That will protect the company from doing something that could look like a forced sale."

The business owns nine buildings in Oslo's Aker Brygge financial district with combined space of 89,428 square meters (963,000 square feet). Tenants include DnB NOR ASA, Norway's largest bank, and Det Norske Oljeselskap ASA.

Rents for the best offices in Oslo fell by 10 percent during the second quarter from the first and will probably drop 15 percent more by the end of the year, CB Richard Ellis Group Inc. said. Vacancy rates rose to 6.5 percent in the quarter and are expected to reach 8 percent by year-end, according to Los Angeles-based CBRE, the world's largest property broker.

"It's a slow market and it takes time to change," the CFO said. "We are also very dependent on the normalization of banking and financing markets."

Norwegian Property's biggest shareholders include Canica AS with 5.16 percent and AWhilhelmsen Capital with 5.13 percent. Amsterdam-based ING Groep NV controlled through its units 5.57 percent of the company's shares as of Sept. 24.

"We've seen that the number of international shareholders has fallen a lot, particularly in the past year," Thjomoe said. "This is something we regret."

Norwegian Property appointed Olav Line as chief executive officer on Sept. 21, replacing Petter Jansen, who will leave the company on Oct. 1. It didn't say when Line, 51, will take up his new position. Thjomoe will act as CEO in the interim.

Before joining Norwegian Property, Thjomoe held management positions at Norwegian insurer KLP and StatoilHydro ASA, Norway's biggest oil and natural-gas producer.

Madrid's IBEX finished Friday on 11,326.70, down 1.66% for the day.

Repsol, Spain's largest oil producer, lost 1.2 percent to 18 Euros as crude for November delivery dropped as much as 3.5 percent to $68.32 a barrel on the New York Mercantile Exchange.

The Spanish government will offer airlines 600 million Euros ($875 million) of credit through the Official Credit Institute (ICO), Public Works Minister Jose Blanco said on Thursday.

"We're going to open a 600 million Euro credit line through ICO for the airlines," Blanco said at a lunch.

The measure would expand credit lines already available to the airlines, which are posting losses following surging oil prices last year and falling demand for travel due to the economic crisis.

The worst of the Great Recession may be over, but much of the world isn't out of the woods just yet. That's particularly true for Spain, where unemployment borders on 20% and the country's gross domestic product is expected to contract 3.2% in 2009 after years of record growth.

Yet despite that dire domestic outlook, some of Spain's largest companies continue to grow. Take Mapfre, the country's biggest insurance company, with annual sales of $26 billion and operations in 45 countries, including the US Over the first half of 2009 the Madrid outfit boosted revenues to $14.6 billion, up 12.9% from the same period last year. No wonder, then, that Mapfre is the highest-ranking finance firm in A.T. Kearney's 2009 league table of global champions.

So how has Mapfre succeeded when others in the financial services industry have floundered? There are a couple of reasons. In recent years, the insurer, which specializes in nonlife products such as home and auto insurance, has aggressively expanded into new international markets, like Turkey and the US, while investing millions to shore up its 25-year presence across Latin America. The global push has been coupled with cost-cutting moves at home to offset lackluster growth in the Spanish market, which still represents 66% of the insurer's profits. "The recession has hit Mapfre like everyone else, but its international size and shrewd business approach have offset many of the problems," says Joao Pena, A.T. Kearney's managing partner for Spain and Portugal. "Right now, the company's strategy is looking very attractive."

Mapfre first entered Latin America in the mid-1980s, but its emphasis has shifted to the non-Spanish speaking world. In March 2007, the company bought an 80% stake in Turkish insurer Genel Sigorta for $375 million. Months later, Mapfre forked out $2.2 billion for Webster (Mass.)-based Commerce Group, which helped ramp up the company's previously negligible US presence. Analysts expect Mapfre to use its growing footprint in the Northeast US to expand into other states. "The international markets where we're present have much more growth potential than our Spanish business," says Alberto Manzano, Mapfre's vice-president.

The global push has come at just the right time. While Mapfre's first-half profits from its sluggish Spanish operations fell 10.3% annually, to $538 million, the international business's profits jumped 32.6%, to $273 million. The insurer's share price has more than doubled since global stock markets hit their lows in early spring, and has jumped 18.5% since the beginning of the year.

The PSI General in Lisbon ended the week at 2,854.52, declines of 1.51% for the session Friday.

A solution for La Seda de Barcelona's financial problems seems within grasp. Citing sources in the know, the Spanish daily "Expansion" reports that the PET group reached an agreement with the creditor banks on how to redistribute its debt of nearly Eur 870m.

Spanish media reports indicate that the group is in "advanced negotiations" with BA Vidro, which wants to acquire a relevant proportion of La Seda's shares. The move is supposed to be coupled with La Seda´s efforts to push through a capital increase of Eur 150m.

Portugal's investment fund Ongoing Strategy Investments SGPS SA said Tuesday it has launched a full takeover bid on Grupo Media Capital SGPS SA in order to comply with the country's takeover legislation.

Under the Portuguese law, a company holding over one-third of another company's voting rights will be forced to launch a full takeover bid.

In an earlier filing to the Portuguese stock market regulator, the fund said Tuesday it had bought some 25 million shares, or a 29.69% stake, in Media Capital.

As part of the agreement, which is still pending approval by the antitrust authority and by Prisa's financing entities, Ongoing has a buy option on an additional 5.31% stake, or close to 4.49 million shares, in Media Capital.

Under its takeover bid, Ongoing is offering Eur4.26 for each Media Capital share, which is the Media Capital's weighted average price over the past six months and is above the Eur4.14 a share it paid for its Media Capital stake.

Media Capital is the Portuguese unit of Spanish media group Promotora de Informaciones SA (PRS.MC) and operates Portuguese TV station TVI and radio stations, among other interests.

Prisa's investment vehicle Vertix, which holds 94.69% of Media Capital's voting rights, will not accept the offer, Ongoing said.

Ongoing's financial adviser is Banco Espirito Santo.

Italy's benchmark FTSE MIB Index fell for a third day, losing 400.57, or 1.7 percent, to 22,652.94 in Milan. The gauge dropped 1.9 percent this week.

Banca Monte dei Paschi di Siena declined for a second day, falling 2.7 cents, or 1.9 percent, to 1.4 Euros. Bank of Italy Governor Mario Draghi said Thursday that banks should continue to strengthen their capital. "The regulators moral suasion to hoard more capital should put pressure on those banks whose regulatory capital ratios are regarded as not sufficient without the government support," Mediobanca Securities said in a note.

Banca Popolare di Milano Scrl fell 14.25 cents, or 2.8 percent, to 4.96 Euros. Banco Popolare SC (BP IM) dropped for a third day, losing 15 cents, or 2.4 percent, to 6.21 Euros.

Fiat lost 39 cents, or 4.1 percent, to 9.09 Euros. The shares gained 7.8 percent Thursday as Morgan Stanley more than doubled its price estimate on the Italian carmaker. MF Global reiterated a "sell" rating on the stock and a "cautious" stance on the automobile sectors because of "concerns about the strength of underlying demand post incentives and importantly the speed of recovery."

Exor, Fiat's largest shareholder, fell 28 cents, or 2.2 percent, to 12.67 Euros.

Intesa Sanpaolo declined 6.25 cents, or 2.1 percent, to 2.9 Euros. Banks retreated in Europe after a stress test of the European Union's biggest banks showed they could withstand an even deeper recession, though with losses.

UniCredit dropped 5.75 cents, or 2.2 percent, to 2.54 Euros. Unione di Banche Italiane SCPA (UBI IM) slid 22 cents, or 2.1 percent, to 10.11 Euros.

Piaggio & C. gained 3.2 cents, or 2.2 percent, to 1.52 Euros, ending a three-day loss. Europe's largest motor- scooter "is improving its market share mainly due to its leadership position in the scooter," Deutsche Bank AG said in a note. The brokerage, which kept a "hold" rating on the stock, also said that "Piaggio's performance, largely impacted by de- stocking in the first half of 2009 should show some improvements in the second half."

Prysmian fell 35 cents, or 2.8 percent, to 12.4 Euros, a fourth consecutive loss. Copper fell in London for a fifth week, the longest losing streak in more than a year, as the Dollar strengthened and rising inventories spurred concern that demand might be waning.

Risanamento rose 0.55 cents, or 1.2 percent, to 45.75 cents. Creditor banks are ready to grant it 70 million Euros ($102 million,) to cover a possible delay in a tax reimbursement the Italian real-estate company expected to receive in 2010, Il Messaggero reported.

STMicroelectronics, Europe's largest semiconductor maker, fell 19 cents, or 3 percent, to 6.13 Euros, extending losses of 2.5 percent Thursday. The Philadelphia Semiconductor Index retreated for a second day, after falling 4.8 percent Thursday, the steepest decline in almost five months.

Global semiconductor sales fell 16.1 percent to $19.1 billion in August from a year earlier, the Semiconductor Industry Association said Friday. Sales increased 5 percent from the previous month.

Tenaris, the world's biggest maker of seamless steel tubes for pipelines, dropped for a fourth day, losing 40 cents, or 3.4 percent, to 11.48 Euros. Crude fell in New York, paring this week's gain, on signs the US economy is still in the midst of a recession, limiting fuel demand in the world's biggest energy consumer.

Saipem, Europe's largest oil-field services contractor by market value, retreated 52 cents, or 2.6 percent, to 19.76 Euros.

Tod's increased 1.02 Euros, or 2.2 percent, to 47.89 Euros, the highest since January 2008. UBS AG upgraded the Italian luxury- goods maker known for its rubber-studded driving shoe to "buy" from "neutral."

The Athex in Athens finished another volatile week at 2,593.43, a dip of 2.06% for Friday.

Greeks vote in a national election on Sunday with the opposition socialists leading in polls but not guaranteed to gather enough support to form a government outright.

With no clear winner, Greece could be plunged into weeks of political limbo at a time of economic crisis.

Here are scenarios of how the situation could develop and the political and financial risks at stake:

ONE PARTY WINS OUTRIGHT

Polls show the socialist PASOK party has gained support since the vote was announced on Sept. 2, bringing it closer to gaining an outright majority. In the last polls published on Sept. 18, it was seen leading by about 6 percentage points.

However pollsters stress it is hard to predict how votes translate in seats because of Greece's complex electoral system and say PASOK would need well above 40 percent of the vote to gain a comfortable parliamentary majority.

NO CLEAR WINNER

This scenario is still possible if PASOK does not gain enough ground. It would mean a repeat election or, much less likely, a coalition government could be formed.

Analysts say an inconclusive vote would increase uncertainty in debt-ridden Greece, which narrowly escaped recession this summer and needs a strong government to tackle long-delayed reforms.

Greek shares fell after the election was announced on fears there would be no clear election winner. For the same reason, premium investors' demand for 10-year Greek bonds rather than benchmark German Bunds rose to a six-week high at the time.

ANOTHER ELECTION

This is the most likely outcome if PASOK wins but cannot govern on its own. The new election would be held under a new electoral law that gives the winning party an increased first-party bonus, enabling it to win an absolute majority of seats more easily. This would extend the electoral period by at least 30 days.

COALITION UNLIKELY

PASOK is open to cooperation with other leftist parties but the communist KKE and the Left Coalition have ruled this out.

The far-right LAOS parties has repeatedly offered its support to New Democracy, but its leader told Reuters this week he believed the conservatives had no chance of winning.

New Democracy has so far turned down its support but may change its mind if many of its disgruntled voters turn to LAOS.

If none of the three leading parties can form a coalition, the president dissolves parliament, calls new elections and asks a senior court official to form a caretaker government until new elections are held.

BLOCKING TACTICS?

The loser could trigger another parliamentary election in March by blocking the election of the president. Analysts also see this as unlikely as no party would gain from dragging Greece through a prolonged crisis.

 

Karamanlis has ruled out using this tactic.