By Aude Lagorce
European markets rose Friday as gains for defensive stocks offset declines for banking shares.
The Stoxx Europe 600 index rose 0.3% to 277.78, paring losses for the week to 1.4%.
A report showing a surge in Chinese inflation kept stocks in check, fueling expectations of further monetary tightening that could slow the country's growth.
As the main indexes wavered between small gains and losses throughout a volatile session, however, defensive stocks such as consumer-goods firms Reckitt Benckiser Group. and Beiersdorf (FRA:DE:BEI) did well, ending up 2.7% and 2.1%, respectively.
Meanwhile, financial shares sagged after Bank of America posted a decline in quarterly profit on the back of weak investment banking and trading results. Commerzbank (FRA:DE:CBK) dropped 4.3% in Frankfurt, while Credit Agricole (PAR:FR:ACA) dipped 1.9% and Natixis fell 1.7% in Paris.
As Europe trade was ending, U.S. shares were mostly higher after a series of economic reports offset the disappointing earnings from Bank of America and also from Google.
The Dow Jones Industrial Average was up 40 points, or 0.3%, at 12326. The Nasdaq Composite edged up 0.1% to 2762 and the Standard & Poor's 500-stock index rose 0.4% to 1319.
In London, the FTSE 100 index added 0.5% to 5996.01, helped by gains in the retail sector, but it slipped 1% for the week.
Sales at unlisted supermarket Waitrose soared 25% year-on-year last week, the group said Friday, as Britons took advantage of the warm weather. The news helped Next PLC add 2% and Marks & Spencer Group (LON:UK:MKS) advance 1%.
In the financial sector, hedge-fund manager Man Group climbed 4.2% after Bank of America Merrill Lynch added it to its Europe 1 focus list, saying it is likely to be a strong performer over the next two to three years.
Bookmaker Ladbrokes rose 0.9% after deal talks with online casino operator 888 Holdings (LON:UK:888) ended. Shares of 888 sagged 16%.
Deutsche Bank also upgraded Ladbrokes to "buy" from "neutral," citing rising visibility on the firm's operational turnaround and a "revitalized" senior management team.
Among technology stocks, semiconductor firm Micro Focus International (LON:UK:MCRO) lost 7.8% after it announced that Chief Executive Nigel Clifford was leaving barely a year into the job.
In Frankfurt, the DAX 30 rose 0.4% to 7178.29, led by a 2.4% advance for drug firm Merck KGaA (FRA:DE:MRK) . The index snapped three weeks of gains with a 0.5% weekly loss.
In the chemicals sector, K+S rose 1.3% after it said it was considering further price hikes for potash fertilizer. BASF (FRA:DE:BAS) gained 1.7%.
Hochtief (FRA:DE:HOT) lost 3.6% after UBS downgraded the German construction group to "neutral" from "buy."
In Paris, the CAC 40 inched up 0.1% to 3974.48, helped by a 2% gain for cosmetics giant L'Oreal (PAR:FR:OR) , but finished the week down 2.2%.
Carrefour (PAR:FR:CA) fell 1.4% as Jefferies analysts cut their rating on the stock to "hold" from "buy," citing the group's sluggish European performance and worst-than-expected cash flow.
In earnings news elsewhere in Europe, Nestle (SWX:CH:NESN) rose 2.4% after the Swiss food company reported first-quarter organic sales growth accelerated to 6.4% and confirmed its outlook for the year.
Debt concerns were again in the spotlight as Moody's Investors Service cut its rating on Irish government bonds by two notches, citing the further weakening of the government's financial strength.
The Irish ISEQ index, however, gained 0.6% to 2955.80.
Bernard McAlinden , strategist at NCB Stockbrokers, said there was little reaction to the Irish news because so much of it had been priced in already. He also noted that worries about Spain seem to be receding.
"You're just kind of flat this morning because, although we had bad Greek news yesterday, the spread on the Spanish bonds in relation to the German bonds didn't rise much. So that means we still don't really have a European-wide problem at this point."
Finnish elections this weekend could influence equities in the coming week, because the Finns have been staunch opponents of bailouts. Too big an advance for the populist Eurosceptic party, the True Finns, could be a worrying development.
"The Finns have been more German than the Germans on the whole debt issue," Mr. McAlinden said. "If that party gains too much ground, it could trigger worries that Europe will reach an impasse when trying to get agreement to raise the lending capacity of the stability fund."
Write to Aude Lagorce at firstname.lastname@example.org