European stock markets steady as worries over debt crisis ease

LONDON (AP) — European stocks were steady Friday as worries about the region's fiscal crisis eased after Spain, one of the most pressured by markets, successfully sold bonds and after government leaders said they would reveal results of bank stress tests.

Although Spain was charged higher costs to borrow money, demand for the debt was healthy, boosting sentiment among investors worried the country could need a financial backstop.

Later Thursday, the EU's 27 leaders agreed to publish the results of tests that check the stability of banks. The results were not initially meant to be made public, but after some countries said they would do so to quell rumors of banking problems, the EU agreed to act in unison. The move was seen as a vote of confidence in the financial sector.

Britain's FTSE 100 stock index was up 0.2 percent at 5,262.93 while Germany's DAX was flat at 6,220.91. France's CAC-40 edged down 0.3 percent to 3,670.73 and Spain's index added 0.9 percent.

The indexes had initially risen more, but weak gains on Wall Street at the open saw the rally fizzle out. The Dow Jones industrials average was up only 4 points at 10,439 while Standard & Poor's 500 index gained 1 point to 1,116.

The euro, meanwhile, traded at $1.2372 about the same as Thursday in New York but well up from the four-year lows below $1.19 hit early last week.

Publication of the bank tests "could turn out to be a key stepping stone towards increasing the transparency of the eurozone banking sector," said Mitul Kotecha, analyst at Credit Agricole.

Good news also came from Greece, where the International Monetary Fund, the European Union and the European Central Bank jointly said that deficit-reducing spending cuts were on track.

Greece received the first installment of loans in May, just in time to prevent default and repay government bonds that were maturing. It is to receive the next in September if the July review — the first formal review — shows it is still meeting its targets.

"All in all, a significant amount of uncertainty was resolved yesterday," Credit Agricole analysts said.

The upbeat data continued on Friday, when official figures showed Britain's public borrowing was below expectations in May. Though the 16 billion pounds borrowed remained high by historical standards, it will be welcomed by markets ahead of the government's publication on Tuesday of an "emergency budget" to fight the deficit.

Shares in BP, which had risen sharply on Thursday after the company agreed to set up a $20 billion fund to pay for the oil spill damages, were up another 1.2 percent in London. Experts say the deal offers some clarity on the extent of the company's liabilities.

Earlier, Asian indexes were mixed by the closing bell.

Japan's benchmark Nikkei 225 stock index edged down less than 0.1 percent to 9,995.02 and China's Shanghai Composite Index shed 1.8 percent to 2,513.22 ahead of Agricultural Bank of China's record-breaking initial public offering. Taiwan's index dropped 0.3 percent.

Elsewhere, South Korea's Kospi rose 0.2 percent to 1,711.95 and Australia's S&P/ASX 200 gained 0.5 percent to 4,551.90. Hong Kong's Hang Seng added 0.7 percent to 20,286.71.

The dollar fell to 90.77 yen from 90.92 yen in New York late Thursday.

Benchmark crude for July delivery was down 65 cents at $76.14 a barrel in electronic trading on the New York Mercantile Exchange. The contract dropped 88 cents to settle at $76.79 on Thursday.