US Markets - Wall Street experienced another choppy week of trading and with stocks slightly firmer on Friday, the important benchmarks recorded one of their better weeks since the squeeze in the credit and money markets emerged in mid-July.

In choppy trade, the S&P 500 index closed up 0.02% at 1,484.25; a rise of 2.1% this week. The S&P has now rebounded more than 5% from its mid-August low point of 1,406.70 when credit concerns intensified. That leaves the benchmark slightly more than 4% below its record close of 1,553 from mid-July.

Although energy stocks led the S&P’s major sectors higher, retailers and financials also rebounded smartly this week. Technology, which had done well in previous weeks, lagged behind in recent days.

Homebuilders also underperformed. That group has now fallen more than two-thirds from its peak in 2005.

The Nasdaq Composite closed up 0.04% at 2,602.18; a gain of 1.4% since Monday.

The weak Dollar helped boost the appeal of large multinational companies, such as those in the technology sector, and the Nasdaq 100 index was up 2.2% this week, outpacing the Composite.

Among big technology stocks, Apple rose 5.3% to $138.81 as it announced the sale of 1m iPhones. UBS raised its price estimate to $182.

The Dow Jones Industrial Average pushed up 0.1% on Friday to 13,442.52; a gain of 2.5% during the week.

This was the Dow’s best week since a rise of 2.8% for the week ending April 20.

Several Dow stocks surged this week. McDonald’s rallied 12.6% to $55.45 and set a record high of $55.51 on Friday. The fast food group announced a 50% increase in its annual cash dividend to $1.50 a share after posting a 8.1% rise in global same-store sales during August.

Boeing gained 4.8% to $99.35, as the aircraft maker said it had won a $1.1bn US Air Force deal.

As oil entered record territory, Exxon Mobil rallied 3.4% to $88.67.

JPMorgan, a Dow banking stock, rose 4.6% to $45.54 as investors continued to discriminate among financials. The S&P Financials sector was up 2.6% this week, reversing some of the 5% loss in the previous two weeks. The S&P Investment bank index rose 5.8%; its best weekly performance since mid-April. It had largely repaired the damage of the previous two weeks.

Among the brokerages, Lehman outperformed with a rise of 12.4% to $59.50.

Bear Stearns rallied 11.2% to $117.19 and steadily accrued gains from Monday, when a filing revealed financier Joseph Lewis was the investment bank’s single largest shareholder after a stake-building that began two months ago.

Attention will now focus on sector earnings. “The major investment banks, namely Lehman, Bear, and Goldman report and undoubtedly will help set the tone for stocks and help gauge why damage was done over the last few months,” said David Ader, bond strategist at RBS Greenwich Capital.

Countrywide, the largest US mortgage lender, plunged early this week to a low of $16.18 as fears about its ability to secure financing intensified.

On Thursday, the bank secured $12bn in financing and the stock rose 14%. It was rose a further 2.6% to $19.42 on Friday.

European Markets - A solid run of gains for European stocks juddered to a halt Friday as the problems at UK mortgage lender Northern Rock undermined confidence in the wider European banking sector.

The FTSE Eurofirst 300 index fell 17.13 points, or 1.1%, to 1,507.22, but that still left it a net 0.8% higher over the week.

A tentative recovery for banking stocks early in the week was snuffed out as Northern Rock’s woes triggered concerns that the liquidity squeeze in the sector could claim more victims. A downgrade of four leading investment banks by Société Générale further weighed on the sector.

Let's change the pattern a little this week and start in The Netherlands where Shares in Amsterdam closed well off their lows.

The AEX closed down 2.60 points or 0.49% at 528.36 after opening at 529.14, and reaching a midafternoon low of 524.38.

Temping stocks led decliners, with Vedior falling 4.56% to 15.28, USG People down 5.19% to 20.09, and Randstad sliding 3.65% to 36.71 amid the company buying German staffing company Team BS for 71  million Eur cash. SNS Securities said the buy was a 'nice add-on acquisition for Randstad.'

BAM was 4.20% lower to 18.92 after the company said it has completed its takeover of Belgian civil engineering company Betonac. Heijmans weakened 3.71% to 32.40.

Hagemeyer shed 2.97% to 2.94, Corporate Express lost 3.38% to 7.73 and Unibail-Rodamco slid 1.98% to 173.52.

Among oils, SBM Offshore was down 1.70% to 26.54. Royal Dutch Shell was the second share traded in terms of volume, closing 1.01% to 29.44 after the company said its Texas refinery was shut after the last hurricane.

KPN was another heavily traded stock, losing 1.15% to 12.0.

Among chemical issues, Akzo Nobel was down 0.82% to 55.64 and DSM went off 0.39% to 36.21 Eur after the company said it will make a 'significant investment' in the polyethylene sector.

Dutch financials were not very much hit by Northern Rock's woes, tracking rather Wall Street in general and their own issues in particular. ABN Amro was the most heavily traded stock of the day, down 0.54% to 35.0 with the banking group seen by analysts as giving a neutral opinion on its two rival takeover bids, with many expecting a statement as early as this weekend. Meanwhile, Barclays reiterated it is prepared to 'walk away' from the bid if the transaction does not happen 'on the right terms'.

Amid other financials, Fortis shed 0.54% to 25.66 Eur amid reports the bank may sell off parts of its business banking operations in the Netherlands due to its bid for ABN Amro. ING slipped 0.60% to 29.99 Eur as the bank reiterated it is not interested in struggling UK mortgage bank Northern Rock. Aegon edged 0.08% lower to 13.22.

Biotech issues had a good day, with Crucell gaining 1.97% to 15.04 Eur after the company said it will report a breakthrough in its research into a H5N1 bird flu vaccine. Pharming closed up 3.97% to 2.62 following an upgrade at SNS Securities.

ArcelorMittal closed up 2.01% to 49.16, with Reed Elsevier adding 1.14% to 13.32 Eur after Merrill Lynch raised the stock to 'buy' from 'neutral'.

The other AEX gainer was TomTom, 0.77% higher to 52.65.

Into France now where in Paris Share prices closed lower in line with Wall Street, although off heavier afternoon losses.

Investors remained cautious about the ongoing credit squeeze in the wake of funding problems for UK mortgage lender Northern Rock plc, and a warning from IT services group Capgemini that Indian unit Kanbay's sales are suffering as a result of the subprime crisis, market sources said.

The CAC-40 index finished down 27.05 points or 0.49% at 5,538.92.

Among CAC-40 stocks, 9 closed higher, 30 closed lower and 1 was unchanged.

On the Matif, September CAC-40 futures were trading at 5,529.5.

On the broader indices, the SBF-80 index closed down 44.73 or 0.68% at 6,555.57 and the SBF-120 was 20.75 or 0.51% lower at 4,031.21.

Over the week, the CAC-40 gained 108.82 points or 2.0% compared to last Friday's close of 5,430.10.

The index fell below the 5,500 mark in afternoon trading as a sell-off of banking shares was comPounded by a sharp fall for Capgemini.

The company's shares plunged more than 5% on talk it would have to cut its full year forecasts because of difficulties at Kanbay in India.

Capgemini later confirmed to Thomson Financial News that chief financial officer Nicolas Dufourcq yesterday warned Kanbay will see sales suffer as a result of the subprime crisis.

Financial services group Kanbay relies on mortgages for one-third of its revenues and generates 90% of sales in North America, but its total sales make up only 5% of those of the group.

But Capgemini said it is sticking to existing full-year sales and earnings guidance for the group, pointing out that Kanbay only accounts for 5% of total sales.

The stock closed down 1.70 Eur or 3.93% at 41.51, leading bluechip fallers.

The news added to jitters following Northern Rock's announcement this morning that it has set up an emergency borrowing facility with the Bank of England.

Among French banks, Societe Generale ended down 2.58 or 2.22%, BNP Paribas shed 1.12 or 1.50% to 73.72, Dexia was 0.27 or 1.27% lower at 20.95, while Credit Agricole was down 0.27 or 1.00% at 26.83.

Outside the CAC-40, investment bank Natixis was particularly hard hit -- losing 0.61 or 3.98% to 14.71 -- after it was downgraded to 'sell' from 'hold' by Societe Generale.

Overall, shares pared their losses towards the close in keeping with Wall Street, where investors shook off initial disappointment with a fall in core retail sales for August and a lower than expected reading for industrial output.

Elsewhere in Paris, Alcatel-Lucent fell further in the aftermath of its profit warning yesterday, giving up 0.12 or 1.81% to 6.50.

CEO Patricia Russo is reportedly coming under pressure from French board members to bolster her management team, the Financial Times reporting that the latest profit warning is fuelling pressure for changes to the way the management team is organised.

Housing-related stocks also lost ground amid the latest fears about the subprime fallout. Construction groups Bouygues -- down 1.63 or 2.71% at 58.52 -- and Vinci -- off 1.27 or 2.52% at 49.09 -- were among the heaviest bluechip fallers, as was property group Unibail-Rodamco -- down 4.09 or 2.31% at 173.05.

Among the handful of CAC-40 stocks bucking the negative trend, Alstom led the way by rising 3.32 or 2.37% to 143.32.

The engineering firm's CEO acknowledged that the group is interested in a tie-up with state-owned nuclear group Areva, but said Alstom is not currently in discussions over the project.

Gaz de France gained 0.76 or 2.26% to 34.34 on the back of a Credit Suisse upgrade to 'outperform' from 'neutral'. The news lifted GDF's merger partner Suez - up 0.54 or 1.41% at 38.84 -- as well as fellow utility EDF -- up 1.40 or 1.93% at 73.80.

Into Belgium now and to Brussels where Belgian shares closed lower with imaging technology group Agfa-Gevaert and supermarket group Delhaize heading the list of blue-chip fallers.

At the close, the Bel 20 was down 24.58 points or 0.57% at 4,259.54.

Agfa was down 0.51 Eur or 3.40% at 14.49 Eur and Delhaize was down 1.42 Eur or 2.08% at 66.95 Eur.

Agfa said it has signed a five-year deal worth 35  million usd for digital radiology imaging systems for hospitals in Florida run by the Adventist Health System.

Discount supermarket group Colruyt was down 2.88 Eur or 1.84% at 153.60 Eur.

Solvay was down 1.47 Eur or 1.42% at 102.39 Eur. Analysts said the pharmaceutical company's rumoured Thai acquisition would have a 'limited impact' on the group.

Belgian dailies L'Echo and De Tijd reported this morning that Solvay's Thai unit Vinythai will buy plastics manufacturer APEX Petrochemical for 71.5  million Eur.

Among the heavyweight financials, Dexia was down 0.29 Eur or 1.37% at 20.93 Eur, KBC Group fell 1.11 Eur or 1.17% to 93.87 Eur and Fortis was down 0.13 Eur or 0.50% at 26.95 Eur.

On Fortis, analysts mulled the issue of remedies which the bank filed to the European Commission to obtain regulatory clearance for its acquisition of Dutch peer ABN Amro.

Brewer InBev was down 0.06 Eur or 0.10% at 62.04 Eur.

Among the gainers, utility Suez was up 0.64 Eur or 1.67% at 38.98 Eur and healthcare group Omega Pharma was up 0.60 Eur or 1.00% at 60.85 Eur.

To Frankfurt now where Germany's benchmark index fell for the first time in four days. Deutsche Bank AG declined after Societe Generale SA advised clients to sell shares of the country's biggest bank. Commerzbank AG also retreated.

Interhyp AG tumbled after the mortgage broker cut its sales and profit forecasts.

The DAX Index lost 38.23, or 0.5%, to 7,497.74, limiting this week's advance to 0.8%. DAX futures expiring in September fell 41.5, or 0.6%, to 7,510 at 5:51 p.m. in Frankfurt. The HDAX Index of the country's 110 biggest companies decreased 0.5%.

Deutsche Bank retreated 1.21 Euros, or 1.3%, to 89.97. Societe Generale cut its recommendation on the stock to ``sell'' from `hold.''

Commerzbank tumbled 1.15 Euros, or 4.1%, to 27.23 Euros. Societe Generale removed shares of the country's second- largest bank from its ``premium list'' and cut its price estimate to 35 Euros from 41 Euros.

Deutsche Postbank AG, Germany's biggest consumer bank by clients, decreased 95 cents, or 1.9%, to 49.63 Euros. Hypo Real Estate Holding AG, the mortgage bank spun off from HVB Group, slid 74 cents, or 1.9%, to 37.49 Euros.

Interhyp plummeted 27.34 Euros, or 33%, to 55.48 Euros, the steepest fall since the company's initial public offering in September 2005. The mortgage broker lowered its outlook for earnings and revenue for the year because of a drop in demand for residential mortgages.

Beiersdorf AG climbed 62 cents, or 1.2%, to 50.71 Euros. The maker of Nivea skin creams is likely to be the main beneficiary as household-goods and personal-care companies in Europe increase profits more quickly than food producers this year.

Deutsche Beteiligungs AG advanced 24 cents, or 0.9%, to 26.40 Euros after the buyout firm focusing on small- and medium-sized companies said third-quarter net-income rose 28% to 44.2 million Euros.

Deutsche Post AG rose 39 cents, or 1.9%, to 21.10 Euros. Europe's biggest mail carrier said logistics- division head John Allan will replace Edgar Ernst as chief financial officer on Oct. 1.

K+S AG rallied 10.46 Euros, or 10%, to 111.52 Euros, the biggest one-day gain ever. Russian investor Andrei Melnichenko, who controls EuroChem, the world's seventh- largest fertilizer producer, has bought a stake in Europe's largest producer of potash used in fertilizers.

Repower Systems AG increased 3.50 Euros, or 3.2%, to 111.49 Euros after HSBC Holdings Plc initiated coverage on shares of the wind-turbine builder with an ``overweight'' recommendation.

Software AG dropped 1.15 Euros, or 1.6%, to 69.79 Euros after WestLB AG cut its recommendation for shares of Germany's second-largest software maker to ``add'' from ``buy.''

To Austria now and Vienna where Shares closed lower, led by banks Raiffeisen International and Erste Bank, as credit-crunch woes returned to trouble global markets, while utility Verbund rose for the second day on a bullish outlook.

The ATX closed down 0.84% or 37.99 points at 4,474.39. The ATX Prime closed down 0.90% or 19.79 points at 2,176.67.

Financials Erste Bank and Raiffeisen International led the losers mirroring the downward trend across European peers after the Bank of England provided mortgage lender Northern Rock with emergency funding.

Erste Bank last dealt down 1.19% at 53.23 Eur, while Raiffeisen International, which reportedly will begin a 1  billion Eur capital increase next week, fell 1.56% to 102.90 Eur.

Lending some support, Verbund gained 2.23% to 38.50 Eur on continued strength after the utility's chief executive said yesterday that the company plans to keep its pay-out ratio above 46% and to finance future investments using its cash flow.

In-line with a general sector retreat, steel company voestalpine shed 1.56% to 56.01 Eur, while Boehler-Uddeholm was down 1.21% at 72.10 Eur.

Shares in A-TEC retreated 2.79% to 126 Eur ahead of a court case involving its chief executive Mirko Kovats, which begins on Monday.

Lower on profit taking, shares in Andritz closed down 0.64% at 46.58 Eur, Mayr-Melnhof dropped 0.89% to 77.90 Eur and RHI slipped 0.14% to 34.85 Eur.

Bucking the downward trend across the European oil sector today, OMV was supported by news that construction started today on a 360 km ethylene pipeline extension in Bavaria and last dealt up 0.04% at 45.75 Eur.

Elsewhere, on the ATX Prime shares in KTM Power Sports closed down 0.60% at 52.80 Eur after analysts at RCB cut it to 'hold' from 'buy' and reduced its target price to 55.50 Eur from 57.

Meinl European Land added 3.87% to 10.20 Eur.

Due to post traffic statistics for the first eight months on Monday, Austrian Airlines rose 1.74% to 7.02 Eur, while fellow airline SkyEurope slid 1.07% to 2.77 Eur on oil prices.

Now to Zurich where Swiss Share prices closed broadly lower in-line with markets across Europe.

The Swiss Market Index closed 105.47 points or 1.1% lower at 8,772.58, and the Swiss Performance Index down 83.89 points at 7,121.90.

Financials were among the biggest decliners, with Julius Baer shedding 2.6% or 2.05 SFr to 77.15, and Credit Suisse decreasing 1.7% or 1.30 to 76.45.

UBS closed down 1% or 0.65 SFr at 61.55.

Adecco was another major loser, declining 2.3% or 1.70 SFr to 71.70, as was Holcim, off 2.1% or 2.60 to 121.30 SFr, as fresh economic concern weighed on cyclical stocks.

Heavyweight Nestle was down 6.50 at 524.50 SFr.

Pharmaceuticals closed lower, with Novartis down 0.50 to 64.75, and Roche down 1.70 at 207.50 SFr, on news that the US Food and Drug Administration has asked an advisory panel to review Genentech Inc's Avastin for first-line treatment for metastatic breast cancer, potentially delaying the drug's approval for a second time.

Nobel Biocare was the sector's worst performer, shedding 2.2% or 7 SFr to 309, continuing its recent downward trend.

Syngenta was the market's only gainer, adding 1% ro 2.40 to 239 SFr, with Swiss broker Kepler initiating coverage of the agribusiness group with a 'buy' recommendation and 265 SFr price target.

Into the Nordic arena now and starting with Denmark where Copenhagen shares closed lower, while Novo Nordisk rose on liraglutide clinical test results.

The OMXC20 index closed 1.46 points lower at 487.08 and the OMXCB Benchmark index fell 1.78 points to 463.56.

The OMXC All Share index closed 1.72 points lower at 475.61 on turnover of 4.09  billion DKr.

Danske Bank closed 4.5 DKr lower at 204.5, hit by the negative sentiment for the bank sector in Europe.

Novo Nordisk B rose 8 to 648. A Phase 3 study confirms liraglutide -- the group's once-daily human GLP-1 analogue treatment -- leads to both glucose and weight reduction with a low risk of hypoglycaemic events.

These hypoglycaemic events are connected with a deficiency of glucose in the bloodstream.

Lundbeck added 0.5 to 141. Daily Boersen said analysts have noted a sharp growth in medicine industry acquisitions as the companies hunt for new drugs. Lundbeck is seen as buyer in an attempt to strengthen its pipeline.

Coloplast was down 7.5 at 491.5.

SAS fell 1 to 94. The airline continues to cancel flights while its Bombardier Dash-8/Q400 planes are grounded following crash-landings, and the Scandinavian civil aviation authorities will review the situation on Monday.

AP Moller-Maersk A shed 100 to 69,300 and the B-shares fell 300 to 70,200. The group produced 280,200 barrels a day of oil and condensate in the North Sea in August, down from 300,200 bpd a year ago, but up from the 278,000 reported for July.

DS Torm rose 0.75 to 208.75 and DS Norden added 7 to 511.

Carlsberg B shed 2 to 717. Indian daily Economic Times said Carlsberg's joint venture South Asia Breweries is buying 60% of India's Parag brewery for 320 mlm rupees in India, but neither Parag nor Carlsberg will comment on the report.

Danisco rose 1.5 to 385. Its Genencor enzymes division is teaming up with DONG Energy, Statoil and AgBioEnergy to produce second-generation bioethanol at a demonstration plant, which is scheduled to come on stream by the climate summit in 2009.

Novozymes rose 4 to 637. Yesterday, the company signed a development agreement with the Brazilian sugar cane industry's technical centre, CTC, which led Amagerbanken to recommend investors buy into the stock.

However, S&P, which prepares analyses for Nordea Bank, has a 'sell' on the stock, which it believes is expensive.

Vestas Wind Systems added 2.5 to 363.5 on a raised target price, to 385 DKr from 320, at HSBC, which repeated its 'neutral' stance.

Into Sweden now where the Stockholm story was the same; shares closed lower led by the index-heavyweight banks.

The OMX Stockholm index closed down 1.27% at 380.88, while the OMX Stockholm 30 index closed down 1.41% at 1,179.76. Turnover was 22.82  billion SKr.

The main sub-indices movers today were: industrials down 1.38%, materials down 1.36%, and banks down 2.43%.

The major movers within these indices were: Scania B down 2.46% at 158.50, Boliden down 2.77% at 131.75, and Swedbank A, down 4.43% at 205.

Lindex closed up 0.24% at 104.25, after the fashion retailer reported better-than-expected fourth quarter profits.

Lindex reiterated its financial targets and made no further comment on the hostile bid by KappAhl Holding.

OMX closed up 0.41% at 244.50. The Swedish Financial Supervisory Authority, Finansinspektionen (FI), said it has not found that OMX took any 'prohibited protective measures' against any the bids it received from Borse Dubai or Nasdaq, and has closed its investigation into the matter.

It said furthermore that it received today an offer document for approval and an ownership application from Borse Dubai for OMX, and that corresponding assessments are currently underway for Nasdaq.

In other news, Nasdaq said it could consider sweetening its bid for OMX, and that participants on the OMX-owned Stockholm bourse will not be subject to SEC rules, if it is successful in its bid for OMX.

Into Norway now where Oslo Share prices closed lower, pulled down by oil-related stocks on the weaker oil price, while Aker Kvaerner rose.

The OSEBX Benchmark index closed 2.04 points lower at 482.42, while the OSEAX All Share index shed 3.26 points to 558.96.

Turnover totaled 12.94  billion NKr.

Statoil closed 3.5 NKr lower at 179.5, Norsk Hydro shed 2.25 to 231.5 and DNO fell 0.12 to 11.08 on the weaker oil prices, dealers said.

Statoil has signed a long-term collaboration agreement with Brazil's Petrobras for oil and gas exploration and production, as well as biofuels, and is involved in a new venture to produce second-generation bioethanol in Denmark.

Wavefield Inseis was unchanged at 55. The group won two 'large' seismic deals, one with BP in the North Sea, and one with OMV offshore New Zealand, but gave no financial details.

TGS-Nopec Geophysical, which is merging with Wavefield, rose 1.25 to 110.5.

DOF Subsea was 0.6 lower at 44.1, reversing rises earlier in the day when it won a three-year supply vessel contract a contract worth up to 650  million NKr from Chevron. Following news of the award, Carnegie reiterated its 'outperform' recommendation.

Petroleum Geo-Services rose 0.5 to 141 and Seadrill was up 1 at 113, while Fred Olsen Energy shed 4.5 to 271 and Stolt-Nielsen was down 3 at 172.

Aker Kvaerner was 3.5 higher at 152, adding to yesterday's rise as it catches up with the market's overall performance.

Aker Yards shed 1 to 63.75.

DnB NOR fell 0.1 to 79.4, as news that an upgrade at Credit Suisse helped offset bearish overall sentiment towards the banking sector.

Rounding off Scandinavia this week we go to Finland where Helsinki shares closed lower, mirroring Europe.

The OMX Helsinki 25 index ended 0.34% lower at 3,128.31 Eur, and the OMX Helsinki all-share index closed down 0.36% at 11,525.94. Turnover was 931  million Eur.

Lead bank Nordea Bank closed down 0.99% at 11.02 Eur, while OKO Bank ended 0.28% higher at 14.02 Eur and insurer Sampo A was up 1.03% at 19.67 Eur.

Falls for technology stocks Nokia, down 0.53% at 24.33 Eur, and TietoEnator, down 2.00% at 16.20 Eur, also put pressure on the main indices.

TietoEnator said this morning it has agreed to acquire Fortuna Technologies, an Indian firm specialising in software used in third-generation mobile phones, for 21  million Eur.

Outotec was outperforming, adding 1.85% to 47.45 Eur, helped by news it has won an order of undisclosed value to supply an iron ore sinter plant to India's JSW Steel.

Among the paper producers, Stora Enso R ended down 0.23% to 12.94 Eur. The company is planning to increase the price of lightweight coated magazine paper by around 6% from October 1, local analysts said, citing information from RisInfo.

UPM-Kymmene closed 1.44% lighter at 16.41 Eur.

Elsewhere, Orion B finished 1.40% lower at 16.90 Eur.

Orion said it is suing Indian pharmaceuticals group Wockhardt in the US to prevent it from marketing a generic version of one of its key drugs.

Down to Italy now where in Milan the market closed lower, led by Unipol on merger news, and Lottomatica on weak results.

The Mibtel was down 0.79% to 30,397 points and the S&P/Mib lost 0.79% to 39,058.

Volume traded was an estimated 5.436  billion Eur.

Utilities and telecom stocks continued to outperform the market, banks lagged, while some luxury stocks were supported by results.

Lottomatica lost 4.02% to 24.60 Eur after disappointing results, though several analysts said the results were in-line with their expectations.

Milan broker Intermonte cut its Lottomatica target to 28 Eur, from 32, saying both the results and full year forecasts were below its expectations. The company reiterated its previous full year guidance.

In the financial sector, Unipol lost 5.34% to 2.3675. Unipol is increasingly seen merging with BPM, a deal which brokers say will generate few synergies, and is driven by political rather than business factors.

BPM lost 2.02% to 10.33.

Banco Popolare lost 1.23% to 16.88 after yesterday's gains. Today, further brokers came out with positive views on the bank and its clean-up, saying the second half and full year 2008 will see stronger results.

Unicredito fell 2.19% to 5.815, denying a report of any interest in trouble German bank IKB. Capitalia was off 2.32% to 6.485.

Fondiaria-SAI was up 0.25% to 32.40 after falling yesterday on disappointing first half figures. Goldman Sachs rates the stock 'sell' with a 34.0 Eur target.

In the luxury sector, Bulgari rose 3.86% to 10.46 after strong results. Tod's lost 3.34% to 56.35, still reacting to negative analyst comments on the outlook for margins.

Constructors remain weak. Impregilo lost 3.93% to 4.77. Buzzi Unicem fell 1.46% to 18.49. Italcementi was down 1.79% to 15.92 after announcing a concrete plant in Saudi Arabia as part of expansion in the area.

Finmeccanica lost 1.20% to 20.60 after yesterday's analyst presentation. Brokers said the long-term sales outlook is diappointing, while the quality of this year's earnings is another query.

Fiat eased 0.07% to 19.11. European car figures for July and August continue to show the Italian company outperforming its peers.

Parmalat rose 0.79% to 2.54 after a conference call, including with comments on wanting to expand in emerging countries.

Among utilities, Enel lost 0.65% to 7.69. Iride was up 0.30% to 2.695 after comments on mergers during a conference call.

Eni was down 0.43% to 25.34.

Tiscali lost 1.15% to 2.065 after trimming the price for its acquisition of Pipex activities and after a conference call.

Telecom Italia eased 0.51% to 2.155.

Into Spain now and in Madrid Shares prices closed lower as concerns over the health of the European banking sector and its potential exposure to the US mortgage crisis continued to weigh heavily, with both banks and constructors down sharply.

The IBEX-35 index closed down 216.80 points at 13,861.00, after trading in a range of 13,765-14,025.

Banks tracked the weaker trend across Europe, as Santander shed 0.13 Eur to 12.77 and BBVA was down 0.27 at 15.94, while Bankinter dropped 0.40 or 3.76% to 10.25, giving up yesterday's gains, and Banesto shed 0.29 or 2.16% to 13.11.

Constructors also suffered, with FCC slipping 2.80 or 4.84% at 55.10, ACS shedding 1.75 or 4.89% to 34.06, and Sacyr Vallehermoso was 1.32 or 5.10% lower at 24.55.

Acciona lost 4.35 or 2.54% to 166.90, further depressed by a report in Negocio's rumour column that the company is having difficulty selling its handling unit.

Among the session's handful of gainers, defensive REE rose 0.11 to 33.98, and NH Hoteles added 0.24 to 14.67.

Among small caps, hotel peer Sol Melia was down 0.17 at 13.24.

Vocento dropped 0.53 or 3.30% to 15.55, giving up yesterday's heavy gains after El Mundo said former Grupo Recoletos chairman Jaime Castellanos has denied speculation that he is leading a takeover bid for the media group.

And rounding off Europe this week we go to Athens where Greek shares Shares closed slightly higher, but Hellenic Telecomms (OTE) and its mobile unit Cosmote spiked as the market priced in an election win on Sunday for the incumbent business-friendly conservative party.

The ASE general index gained 0.3% to 4,861.8, and the blue chip index ended 0.3% higher at 2,596.3. The mid cap index fell 0.3% to 6,206.5, and the small cap index closed 0.1% lower at 1,045.5.

Decliners outnumbered advancers 148 to 97, while 85 were unchanged. Turnover was a hefty 545  million Eur, partly because of several block trades in blue chips.

Telecom incumbent OTE led blue chip gainers throughout the session and jumped 4.7% to 23.7 Eur in heavy trade, which dealers attributed to speculation that conservative party New Democracy will come first in Sunday's central government election.

The market perceives the New Democracy party will guarantee further restructuring to unlock value for OTE. Its mobile unit Cosmote grew 3.1% to 22.4 Eur on the same speculation.

Electricity utility Public Power Corp gained 2.4% to 23 Eur on hopes a win by the incumbent party will lead to further restructuring of the company, as promised by the Minister of Finance. Press reports said today the company has applied to the Greek energy regulator to build two 250 MW natural gas units on Crete.

Bottler Coca-Cola HBC rose 1.5% to 36.76 Eur and said its board will be proposing 1 new bonus share for every 2 shares at its EGM on Oct 15.

Bank of Cyprus rose 1.9% to 12.34 Eur after the company said its net profits for 2007 will exceed expectations and that they will revise upwards management guidance when they release nine month results in November.

Titan Cement edged 0.3% higher to 34.54 Eur on a report from the Miami Herald that said the Army Corp's draft report on the environmental impact of mining in Florida has found the mining activities pose no significant health or risk. This suggests Titan will at some point be able to resume quarrying activities in Florida's Lake Belt region.

EFG Eurobank closed flat at 25.4 Eur on the last day of its rights exercise period for its 1.2  billion Eur share capital increase. 

UK Market - Reed Elsevier was one of only a few gainers on a day overshadowed by the woes of Northern Rock.

Merrill Lynch argued, in a note to clients, that there was “compelling logic” for a tie-up between Reed and Dutch publishing group Wolters Kluwer, a deal first proposed 10 years ago

While Reed closed 1.1% higher at 608p, the wider market was dragged down as the Bank of England bail-out of Northern Rock raised fears of further funding problems in the banking system.

An afternoon rally clawed back the worst of the session’s early losses, although the FTSE 100 still closed 74.6 points, or 1.2%, lower at 6,289.3. Gains earlier in the week ensured that, over the five-day period, the benchmark rose 1.5%.

The FTSE 250 fell 218.6 points, or 1.9%, to 10,954.0, dragging the mid-caps to a loss of 1.3% for the week.

Speculation of a possible white knight bid did little to help Northern Rock’s share price, which plunged 31.5% to 438p.

HSBC, a possible buyer, added 0.2% to 888p, although other banks, particularly those with a greater reliance on the wholesale funding markets, came under heavy selling pressure. Bradford & Bingley lost 7.7% to 329¾p,

Alliance & Leicester fell 6.9% to 873p and HBOS dropped 3.6% to 860p. Paragon Group of Companies, the specialist mortgage lender, slumped 16.8% to 298p in spite of insisting that it had adequate financing.

Northern Rock was not the only bad news to hit the market. A day after The Royal Institute of Chartered Surveyors flagged up the first fall in UK house prices for two years, figures from estate agent Rightmove showed asking prices fell 2.6% in the month to September 8.

FTSE 100 housebuilders Persimmon and Barratt Developments fell 6.6% to £10.16 and 4.7% to 829½p respectively, while real estate stocks also lost ground. Land Securities shed 3.8% to £16.69.

Retailers were equally short of support. Next, the clothing chain, lost 4% to £19.20 and Argos-owned Home Retail Group fell 3.7% to 399½p.

Another leading faller was Shire, down 7.4% to £11.54, as fears that US sales of Vyvanse, its next generation treatment for children with attention deficit disorders, had not met expectations were exacerbated by rumours that the drug, a successor to market leader Adderall, would not be reimbursed by health insurers.

Cannacord Adams, the broker, insisted that Vyvanse’s 2.9% share of the total prescription market was “very comfortable”, adding sales should grow as children returned to school.

Wolseley lost 3.9% to 921p as Credit Suisse downgraded the building and plumbing supplies group from “neutral” to “underperform”. “Following a continued deterioration in the US housing market, we have downgraded our FY2008 and FY2009 estimates by 11% and 7% respectively,” the bank wrote.

InterContinental Hotels Group pared heavy early losses as Morgan Stanley reiterated an “overweight” stance on the hotels group. While Morgan Stanley lowered its target price from £12.90 to £11, the bank pointed out that IHG traded at a 20% discount to its peer group. IHG settled 2.1% lower at 965p. The bank wrote: “The shares have been oversold and that the market is not factoring in the resilience of IHG’s fee-based model, nor the profit it will generate from its significant pipeline. The shares trade on a discount to its peers and to other volume-led growth stocks, and look particularly cheap stripping out the real estate.”

Japan & Asia Pacific - Asian markets advanced Friday, buoyed by overnight gains on Wall Street amid hopes that the US Federal Reserve will cut interest rates next week. Hong Kong soared to its third straight record close.

In Tokyo, the benchmark Nikkei 225 index surged 1.94%, to 16,127.42 points.

Investors were cheered by Thursday's rally in New York, where the Dow Jones industrial average rose 133.23, or 1.00%, to 13,424.88 as mortgage lender Countrywide Financial Corp. signaled a possible thawing in credit markets with the announcement it had lined up additional financing.

The Yen's recent weakness also helped Toyota gain 2.4% Friday, while Sony added 2.1% to 5,420 Yen.

Hong Kong shares rose to a record high close, lifted by US interest rate hopes and strong bids at a government land auction next week. The blue chip Hang Seng Index rose 1.5% to 24,898.11.

The index has risen 22%, or 4,511 points, in the past month after hitting 20,387 Aug. 17, when a global credit tightening sparked by US subprime mortgage problems caused a selloff in worldwide stocks.

Kerry Properties rose 4.3% after issuing strong first-half earnings figures. China Shenhua Energy jumped 5.2% on the news mainland Chinese regulators will review the company's share issue plan Monday.

Mainland Chinese stocks rose on renewed speculation that the two mainland bourses might eventually merge with Hong Kong's stock exchange, or that Beijing might consolidate its own local and foreign-currency denominated share markets.

The benchmark Shanghai Composite Index gained 0.7%, or 38.59 points, to 5,312.18. The Shenzhen Composite Index of China's second, smaller market advanced 1.6% to 1,482.86.

There was no indication that any merger is imminent, despite comments by Hong Kong Exchanges and Clearing's chairman, Ronald Arculli, to the local newspaper South China Morning Post that the three bourses ought to eventually set up a single trading platform.

In an interview published Friday, Arculli told the Post that it would make sense to have a single China market, though perhaps with different shareholding and company structures.

Hong Kong Exchanges & Clearing, which runs the city's stock market, said Friday that no blueprint for merging the markets had been drawn up yet.

In Bangkok the Thai benchmark SET Index rose 0.6% to 811.95 as energy blue chips gained on elevated oil prices. PTT and Rayong Refinery each rose 1.3%.

Indonesia's benchmark JSX index rose 0.1% to 2,225.607 amid mixed market sentiment. Telkom fell 1.4% while Astra Agro added 3%. Some commodity issues attracted bids, traders said.

Malaysia's main index rose 0.4% to 1,289.50 in thin volume, off intraday high of 1,294.68 as pre-weekend profit taking dragged most stocks off their highs.

The 30-company Philippine Stock Exchange Index gained 0.2%, to 3,294.55. Philippine Long Distance Telephone Co. gained 0.6% while Manila Electric Co. surged 3.3%.

India's benchmark SENSEX lost 0.07% to 15,603.80.

In South Korea, a strong rebound in shipbuilding sector shares and retail giant Lotte Shopping drove South Korean shares to another higher close. The Korea Composite Stock Price Index, or Kospi, rose 1.2%, to 1,870.02, finishing the week 0.8% lower overall. Lotte Shopping rose 5.3%.

Singapore's benchmark Straits Times Index added 0.9% to 3,536.40. Property stocks led gains, as analysts said the sector's fundamentals remain strong despite a potential slowdown for the rest of the year.

Taiwan's main index rose 1.2% to 9,031.63, with trading volume remaining thin. Cathay Financial Holding rose 3.1% and Chunghwa Telecom added 0.7%.

In Australia Sydney shares closed higher on the back of Wall Street gains and better commodity prices. The benchmark S&P/ASX 200 index added 76.2 points or 1.2% to close at 6,306.8 and the All Ordinaries index ended up 71.1 points or 1.1% at 6,315.7. The S&P/ASX200 September futures contract was up 43.0 points at 6,283.0. Resource and banking sector gained in Friday's trading session.

Index leader BHP Billiton added 1.94%, while rival Rio Tinto rose 1.43%. Gold miner Newcrest Mining closed flat and Lihir Gold surged 2.11%. Woodside Petroleum gained 0.36%, Santos picked jumped 2.30% and Oil Search soared 3.49%.

In the retail space, Woolworths added 0.88% and Coles Group rose 1.38%, but David Jones slipped 0.98%. Gainers among banks included ANZ 1.38%, Commonwealth Bank 0.38%, Macquarie Bank 6.18%, National Australia Bank 1.06% and St. George Bank 0.83%.

New Zealand shares closed slightly higher Friday despite softness in Telecom, as the market inched to the end of a quiet week.

The NZSX-50 index rose 20.25 points, or 0.5%, to 4162.68 on turnover totalling a slim $83.5 million. Rises outnumbered falls 56 to 40.

The top-50 index traversed a mere 60-odd point range during the week, in contrast with the currency which covered a US3½c range.

Discount retailer The Warehouse was flat at 595 after posting an adjusted annual net profit of $97.9m, up just 1.8%, while sales were up 2.4%, below the rate of inflation.

Clothes retailer Hallenstein Glasson fell a cent to 459 after saying annual profit fell 1.3%, to $21.4m, in a result flagged to the market last month.

Top stock Telecom was down 2c at 435. The company has lost another senior executive with the resignation of the chief operating officer of its consumer arm, Kevin Kenrick, to head another organisation.

No 2 Fletcher Building built on yesterday's 22c gain with a 14c rise to 1199, while third-ranked Contact Energy fell 2c to 897.

Fisher & Paykel Healthcare was up a cent at 360, while F&P Appliances rose 10c to 365. Auckland Airport rose a cent to 311, Sky City lost 2c to 438, and Sky TV rose 17c to 560.

Air New Zealand was up 4c at 229, Ebos rose 5c to 485, Infratil was up 8c at 280 and investment company Hellaby was also up 8c, at 274.

NZX jumped 15c to 975, PGG Wrightson was up 2c at 178, Vector rose 5c to 258, and Tower was up 5c at 225.

On the down side, Nuplex fell 13c to 697, Pumpkin Patch was down 9c at 325, Trustpower fell 5c to 838, Port of Tauranga lost 7c to 690, and Cavalier was down 3c at 330.

Commodities - Oil and wheat prices soared to new records this week while gold established a foothold above the key $700 level awaiting next week’s vital decision on US interest rates, which is expected to provide directional impetus for both precious and base metals.

Oil hit new highs in three successive sessions, reaching a record $80.36 on Friday before profit taking dragged prices lower

Nymex October West Texas Intermediate slipped 27 cents to $79.82 a barrel on Friday, gaining 4.1% over the week.

ICE October Brent eased 23 cents to $76.89 a barrel, up 3% this week.

“Too little, too late,” was the verdict of many traders on this week’s decision by the Organisation of the Petroleum Exporting Countries to raise crude output by 500,000 barrels a day from November.

As global oil production is estimated to have shrunk by 650,000 b/d in the third quarter, the cartel’s move was brushed aside as inadequate to prevent further tightening in energy markets over the winter.

Wheat hit a record $9.11¼ a bushel on Wednesday after the US Department of Agriculture predicted global stockpiles would shrink to a 30-year low. CBOT December wheat rose 11 cents to $8.56 a bushel Friday, up 1.5% this week as high prices failed to curb demand from key importing nations. Turkey is currently looking to buy 800,000 tonnes of wheat and the USDA reported huge weekly export sales of 2.132m tonnes, the highest of the decade.

Amid mounting concern about the state of the Australian wheat harvest, Tuesday will bring an updated government forecast which is expected to be dramatically reduced from an earlier 22.5m tonnes estimate closer to current market forecasts which range between 15m to 18m tonnes.

Corn prices shrugged off the USDA’s forecast of a record US corn crop of 13.3bn bushels this year. CBOT December corn rose 5¼ cents to $3.52 a bushel Friday, up 1.3% this week. Traders said some short-term downward price pressure was likely as the US harvest continued but the market remained underpinned by strong and growing global consumption trends.

Soyabean prices were seen as one of the main beneficiaries of the USDA’s update which suggested yields and output could disappoint as farmers switched their more fertile land to corn production. CBOT November soyabeans rose 12¾ cents to $9.54 a bushel Friday, up 5.4% this week.

Gold rose 1.6% to $714.35 a troy ounce over the week after hitting a 17-month high at $717 in Friday’s session. Michael Lewis at Deutsche Bank predicted further weakening in the US Dollar would help to push gold above $800 next year.

Currencies - The Dollar steadied Friday a day after plunging to a record low on the Euro, while the Pound fell on jitters after a Bank of England bailout of key British lender Northern Rock.

The single European currency dipped to 1.3876 Dollars at 2100 GMT, down from 1.3881 late Thursday in New York.

The Euro on Thursday soared to a record 1.3927 Dollars on fears for the future of the US economy and expectations of a rate cut by the Federal Reserve.

The Dollar on Friday was boosted by profit-taking in the Euro and risk aversion on the part of investors who saw the Dollar as a refuge following the Northern Rock bailout.

The US Dollar continued its drop against the Canadian Dollar Friday ahead of an expected rate cut next week by the Federal Reserve and amid record-high oil prices.

Canada's currency rose to 97.32 US cents before easing to 97.12 US cents in late New York trading, up from 96.89 US cents late Thursday.

Sterling dropped to a 14-month low against the Euro on Friday as analysts called the top in the current UK interest rate cycle after the Bank of England revealed it had provided emergency funding for Northern Rock, the troubled mortgage lender.

The news added to the pressure on the Pound, following weak house price data earlier in the week. Figures from the Royal Institute of Chartered Surveyors on Thursday showed house prices dropped for the first time in two years in August.

The fall heightened fears that recent turmoil on credit markets made the UK housing market the next most vulnerable after the US.

Worries were exacerbated on Friday by Rightmove’s UK house price index which showed a 2.5% fall in London house prices – the most in three years.

The Pound fell to a low of £0.6903 against the Euro – its lowest level since July 2006 and taking its losses against the single currency over the week to 1.6%.

The Soth African Rand was bid at 7.1830 per Dollar from its overnight close of 7.1737. It was bid at 9.9792 to the Euro from a previous 9.9401 and at 14.4571 against Sterling from 14.4767 before.

Asian currencies made a weekly advance, led by the South Korean Won, on speculation a cut in US interest rates will boost demand for emerging-market assets.

The Won climbed to a four-week high as a report 13 September showed the value of foreign investment increased last quarter as the economy grew at the fastest pace in almost four years. The Dollar fell to a record low against the Euro as investors bet the Federal Reserve will cut its benchmark rate Sept. 18 to revive the US economy, making Treasuries less attractive.

The Won gained 1% to 928.30 per Dollar this week

Indonesia's 10-year bonds offer a yield premium of 5.14%age points over Treasuries, the most in Southeast Asia. Consumer prices rose more than economists' forecasts in July and August, prompting the central bank, Bank Indonesia, to keep its key interest rate on hold last week after 13 reductions since May 2006.

The Philippine Peso rose for a fourth week as supporters of former President Joseph Estrada failed to mount a threat to the government after his conviction for plunder. The currency climbed 0.5% in the week to 46.315.

Elsewhere, the Thai Baht was little changed this week at 34.25. Chalongphob Sussangkarn, Thailand's finance minister, said 12 September the Baht is ``quite stable.'' The government will boost economic expansion this year with public spending, Chalongphob said Sept. 7.

The Singapore Dollar gained 0.9% to S$1.5113 this week and the Malaysian ringgit climbed 0.7% to 3.4825. Taiwan's Dollar slipped 0.1% to NT$33.071.

And rounding out currencies this week with the RMB. The Chinese currency came off vis-à-vis the US Dollar as the Dollar closed at CNY 7.5175 in the over-the-counter market, up from CNY 7.5105.

China - The People's Bank of China raised interest rates again, four days after China announced that August's inflation index rose to a 11-year high. Starting 15 September, the benchmark one-year lending rate will rise to 7.29%, from 7.02%. The one-year deposit rate will rise to 3.87%, from 3.60%.

The markets had expected the Chinese central bank to raise interest rates for a fifth time before the end of this year. China's policymakers' most recent rate hikes—coming three weeks since the last increase—coupled with other measures taken last week, have sent a strong signal to the financial markets that Beijing is willing to take more aggressive action to keep inflation under control.

China's central bankers have seen inflation rise higher than their original forecasts primarily due to soaring food prices. Earlier this week, China reported that the monthly inflation rate for August rose 6.5% to its highest level since December, 1996.

In the first eight months of this year, inflation rose 3.9%, which is higher than the Chinese bank's original one-year deposit rate of 3.6%. Chinese who leave their money in bank deposits have seen any expected earnings from interest rates eaten away by inflation. The central bank is concerned that this is encouraging people to withdraw their money and invest it in real estate and stocks, fueling asset bubbles in these two sectors.

Even before the latest rate hike, the People's Bank of China exhibited signs that it was getting more serious about reining in inflation.  On 6 September, China's central bank raised the banks' reserve requirement ratio 50 basis points to remove excess liquidity from the banking system. The central bank also issued 150 billion Yuan worth of central bank bills to commercial banks—to punish banks whose loan growth has been too fast—by giving them lower-than-market yields.

While economists applaud the Chinese central bank for relying more on market-oriented tools to prevent the economy from overheating, some argue that allowing the Yuan to appreciate at a faster pace against the Dollar would be more effective in taming inflation. However, Beijing has been loath to let the Chinese currency appreciate faster than the 5% annual increase expected by the markets, lest they be seen as caving to threats from Capitol Hill.

So for now, economists expect the Chinese central bank to further tighten monetary policy in the coming months. In a research note, Goldman Sachs wrote, "Going forward, we expect the monetary authority to implement more tightening measures including one more 27-bp interest rate hike, more aggressive withdrawal of liquidity (possibly through further RRR hikes), and stepped-up moral suasion on commercial banks to curb lending."

********************************************

China on Friday threatened the US with litigation at the World Trade Organisation for imposing anti-subsidy duties on its paper exports, in only the second dispute Beijing has brought since joining the WTO in 2001.

The move marks a further escalation of trade friction between the two nations and follows an abrupt change of policy by the US, which broke a 23-year precedent by imposing so-called “countervailing duties” on exports from what it ­designates as a non-market economy.

The US said tax breaks and low-cost loans from Beijing were unfairly helping China’s exports of coated paper.

It also said China was dumping – selling at a lower price in the US than at home.

Some lawyers have warned that imposing countervailing import duties against China could open the floodgates to a new wave of protection and litigation.

China said the US had failed to show how much its government subsidy programme helped exports, a requirement before imposing duties under WTO rules.

The US must now enter into consultation with China and either withdraw the duties or prepare for a case at the WTO’s dispute settlement panel, which has the power to order retaliatory sanctions.

Clearly this is a bilateral relationship that is highly charged at the moment. But in some sense it is positive that China is using the tools available within the WTO and remaining within an agreed system of rules.

The case is the first brought by China on its own at the WTO.

Previously it joined a case brought by the European Union against the US for restricting steel imports.

Separately, the WTO yesterday announced that the US had requested a dispute panel in its claim that China was failing to protect intellectual property rights.

The European Union is poised to extend anti-dumping duties on energy-efficient Chinese light bulbs for a year although no member states positively support the plan.

In a meeting on Friday, 15 nations abstained, 10 voted against and two were undecided, a diplomat said. Abstention counts as approval of the European Commission’s proposal to retain the tariffs on energy-efficient bulbs at the request of Osram, the German producer.