US Markets - Wall Street posted sharp losses this week as investors worried about elevated long-term bond yields, higher oil prices and the exposure of financial stocks to hedge funds.

Not even the successful trading debut for Blackstone, the first private equity firm to list on an exchange, could dispel the bearish gloom.

Blackstone began trading at $36.45 a share, about 17% higher than its placement price of $31. The stock closed at $35.06.

As a tough week ebbed to a close, the S&P 500 index fell 1.3% to finish at 1,502.66 for a decline of 2% since Monday.

Investors on Friday were also mindful that the S&P 500 index and other benchmarks faced a shake-up in their composition. The S&P removed three stocks, PMC Sierra, ADC Telecom and Sanmina-SCI - all technology companies. As from next week, they will be replaced by Tyco Electronics and Covidien, two companies spun off by Tyco, while Discover Financial Services, a spin-off from Morgan Stanley, will also join the S&P.

The Russell indexes were also rebalanced on Friday, and that sparked some choppy trading ahead of the close said traders.

Among the leading S&P sector groups that led losses, utilities was down 4.4%, healthcare was lower by 3% and financials was off 2.9% for the week.

Real estate investment trusts and homebuilders also fell sharply this week.

The Nasdaq Composite declined 1.1% to close at 2,588.96 yesterday for a fall of 1.4% this week. The Dow Jones Industrial Average fell 1.4% to 13,360.26 for a slide of 2% this week.

Interest-rate sensitive stocks were hurt as the yield on the 10-year bond consolidated near recent highs.

Of greater concern for the financial sector, however, was a shake-out at two mortgage hedge funds owned by Bear Stearns.

Investors wondered if the episode marked the start of further problems as various banks sought to sell collateral and limit their losses to the hedge funds.

Analysts at S&P said: “Recent developments underscore the market and credit risks borne by the major broker dealers as a consequence of their hedge fund investments. This is a sector-wide phenomenon that warrants close scrutiny.”

Late on Friday, Bear Stearns was 1.4% lower at $143.75, for a loss of 4.2% this week. The American stock exchange’s Broker/Dealer index declined 1.8% on Friday, for a loss of 3.6% this week.

The bearish mood in stocks was also a function of concern over earnings and the economy.

Meanwhile, more professional investors are betting that stocks will suffer the summer blues.

For the month of June, the number of short-selling positions on NYSE rose 6% to 12.47bn shares, a record high.

One bright spot this week was a rebound in deal activity after a drought early last week.

Nuveen Investments agreed to a $5.75bn private equity buy-out and shares in the investment manager jumped 15.1% to $62.83.

Genesco rose 6 er cent to $52.57 this week after Finish Line, down 19.8% at $10.13, agreed to acquire the footwear and accessories retailer.

Luxottica rose 3.9% at $37.15 as the Italian eyeware maker bought Oakley, a US rival, in a $2.1bn cash deal valued at $29.30 a share. Oakley rose 12.4% to $28.37 this week.

Equity Inns jumped 15.4% to $22.71 this week after the hotel and motel real estate investment trust was bought for about $1.26bn by a private real estate trust.

Share buy-backs scaled new heights this week.

Buoyed by a $10.3bn sale of its supply unit to private equity firms, Home Depot announced a $22.5bn buyback programme. That helped push its stock up 3.7% to $39.36 this week.

Expedia, the online travel booking site also announced a $3.5bn buyback, worth 42% of its outstanding common stock. Shares rose 14.5% to $29.06 this week.

Semiconductor stocks were in the spotlight this week. Microchip Technology slid 10.1% to $37.80 after the chipmaker cut its sales outlook.

Other chipmakers fared better however, with an upgrade for Advanced Micro Devices boosting the stock 6.9% to $14.57.

Nvidia traded at an all-time high of $43.35 on a split-adjusted basis as the graphics chip maker revealed a new family of processors. The stock rose 10.3% to $43.62.

Earnings and warnings sparked activity in a number of stocks this week.

Andersons, an ethanol and grain producer, rose 8.8% to $45.60 after the company increased its full-year profit forecast.

Sonic, the restaurant group, lowered its fiscal fourth-quarter outlook due to higher prices for dairy and soybean oil and rising labour costs. Its shares fell 11.6% to $21.48.

Best Buy and Circuit City, the electronic retailers, provided disappointing earnings and their shares fell 6.2% to $44.79 and 5.1% to $15.85, respectively.

Another stock in the news this week was Kraft Foods. It jumped 6.6% to $36.75 on Thursday on news that Nelson Peltz, the activist investors had purchased a 3% stake in the food company and seeks asset sales. Kraft was up 2.9% for the week at $36.32 at the close of trade on Friday.

European Markets - Retailers and property groups led European equities lower this week, underlining market fears of the impact of rising interest rates.

The FTSE Eurofirst 300 fell 1.7% over the five sessions to 1,598.81.

Let's start in Frankfurt where German shares closed lower, led down by Infineon on a broker downgrade and weighed down by a sharper-than-expected decline in the June German Ifo business climate index, which raised concerns the German economic recovery may be starting to falter.

The DAX closed 15.08 points or 0.19% lower at 7,949.63, having traded between 7,925.13 and 8,013.60.

The MDAX added 36.85 points or 0.34% to 11,002.66, while the TecDAX was up 0.72 points or 0.08% at 922.79.

DAX futures were 71.50 or 0.88% lower at 8,026.00, while bund futures added 0.07 or 0.06% to 110.10.

The ZEW research institute said early this week its economic expectations index for Germany had also fallen to +20.3 points in June from +24.0 points in May, well below consensus.

On the Frankfurt trading floor, Infineon was the biggest decliner, having dropped 0.29 Eur or 2.26% to 12.52 Eur after Merrill Lynch downgraded its stance to 'neutral' from 'buy' largely on valuation grounds as it said shares in the chipmaker have reached its 12.5 Eur per share price target.

Deutsche Boerse fell 1.45 Eur or 1.71% to 83.45 Eur and Deutsche Postbank declined 0.93 Eur or 1.43% to 63.90 Eur.

Deutsche Telekom eased 0.14 Eur or 1.02% to 13.54 Eur after a spokesman said he had no knowledge about a reported bid to build a broadband Internet network in Australia's major cities, denying a report in the Sydney Morning Herald that the telecom giant may take a part in a government tender.

Bucking today's negative trend, Linde rose 2.11 Eur or 2.51% to 86.25 Eur, making it the biggest gainer on the DAX index today.

Allianz added 2.86 Eur or 1.64% to 177.57 Eur after rumours surfaced that the insurer might announce a sale of its Dresdner Bank unit to Morgan Stanely or JP Morgan over the weekend.

The shares also received a boost after Merrill Lynch raised its price target to 195 Eur per share from 190 and maintained its buy rating on its shares in a bullish broker note.

The broker said that the sale of the insurer's investment banking operations is a growing possibility and admitted it has been conservative in past valuations.

Deutsche Post added 0.07 Eur or 0.29% to 24.04 Eur on news it will form a joint venture with Munich-based IPPEN Verlagsgruppe and Sueddeutscher Verlag.

Over on the MDAX, Deutsche Euroshop dropped 2.46 Eur or 4.37% to 53.86 Eur, while GEA Group gained 0.78 Eur or 3.14% to 25.60 Eur.

Wacker Chemie added 5.14 Eur or 3.06% to 173.29 Eur after UBS raised its price target to 200 Eur per share from 170 and maintained its 'buy' rating on the chemicals company, saying it should benefit from anticipated higher polysilicon prices.

TecDAX-listed United Internet was the worst performer on the index, down 0.34 Eur or 2.21% to 15.02 Eur. Meanwhile Solon added 3.60 Eur or 8.41% to 46.40 Eur.

Across in France Paris Share prices closed slightly lower after a lacklustre session lacking major corporate or economic news, although EDF pursued its rally with the help of a target price hike from another major broker.

The CAC-40 index finished down 6.54 points or 0.11% at 6,023.25.

Volume for the day was 6.7  billion Eur.

Among CAC-40 stocks, 14 closed higher, 25 closed lower and 1 was unchanged.

On the Matif, July CAC-40 futures were trading down 10.0 or 0.16% at 6,053.5.

On the broader indices, the SBF-80 index closed down 40.15 or 0.55% at 7,195.78 and the SBF-120 ended 7.49 or 0.17% lower at 4,389.29.

EDF continued its strong gains from the previous two days as Exane BNP Paribas joined this week's chorus of positive broker comments, hiking its target price to 103 Eur from 67.

EDF's 2.38 Eur or 3.11% rise to 79.00 brought its total capitalisation to 144.0  billion Eur at the close, according to Euronext, putting it back ahead of Total on 140.9  billion.

Among Thursday's broker notes, UBS raised its target price to 100 Eur from 80, highlighting EDF's massive presence in carbon-emission light nuclear power while also adding to expectations that the French government will move quickly to sell another stake in the utility.

Oil major Total, meanwhile, slipped 0.39 or 0.66% to 58.71, weighing down the market given that it is the CAC-40's volume leader.

Michelin also lost ground, falling 1.49 or 1.47% to 100.05, after impressive recent gains and under the impact of JP Morgan's decision to remove the stock from its Analyst Focus List.

Arcelor Mittal, another stock that has performed spectacularly this year, dropped back 0.87 or 1.78% to 48.12.

In contrast, Vallourec climbed 8.00 or 3.42% to 242.10. The tube maker has been a favourite for takeover speculation in recent months given ongoing consolidation in the steel sector and in view of the company's fragmented capital.

Suez and Gaz de France benefitted from the enthusiasm towards EDF, as well as the feeling among some marketwatchers that the odds are rising that the long-planned GDF-Suez merger will go ahead.

Suez ended up 1.00 or 2.45% at 41.85 while GDF finished 0.35 or 0.98% higher at 36.18.

Alstom, meanwhile, rose 0.54 or 0.45% to 120.00 on the back of new contracts.

The group last night announced a joint development contract with E.ON to build a 5 MW CO2 capture demonstration plant at Karlshamn Power Plant in southern Sweden, and also struck a deal with Statoil (nyse: STO - news - people ), to test its chilled ammonia technology for CO2 capture from flue gases.

In The Netherlands Amsterdam shares closed lower after a quiet day as Wall Street remained in negative territory.

The AEX closed 1.79 points or 0.33% lower at 548.75 after opening at 551.82 and trading in a range of 548.211-552.62.

ABN Amro recorded the heaviest volume, with the issue closing down 0.43% to 35.0. Fellow financial Fortis, down 0.52% to 30.89, spent much of the day in positive territory, after the consortium it shares with the Royal Bank of Scotland and Banco Santander said it plans to present its 71.1  billion Eur offer for ABN Amro to the Dutch bank's shareholders in mid-July, in line with a timetable it published last month.

Aegon slid 1.19% to 14.96 while ING turned higher just before market close in heavy volume, closing up 0.06% to 33.44.

Unilever also saw some heavy trading, rising 1.81% to 22.50, as did Royal Dutch Shell, down 0.84% to 29.48.

Hagemeyer also recorded volume on this quiet day, rising 0.55% at 3.67 Eur after the CEO announced he will step down in April.

Arcelor Mittal led decliners on the AEX, down 1.80% at 48.12 Eur after the company said its output for the European market will drop 3-4% from the second quarter to reduce inflated inventories.

TomTom was 1.26% lower to 37.60 Eur after downgrades at Petercam and Kepler.

KPN fell 1.21% to 12.22, and TNT shed 1.09% to 32.54.

On the midcap index, SNS Reaal fell 1.59% to 16.73 with dealers blaming the dilution of profits they expect to see after the company's upcoming 350  million Eur share issue.

Vopak slid 1.22% to 42.90, Ordina shed 1.31% to 15.78 and Van der Moolen lost 1.04% to 3.81.

ASML was the strongest gainer on the AEX, up 2.61% to 20.83 following a recent spike in spot prices for DRAM memory chips.

Akzo Nobel put on 0.53% to 63.05 and Ahold added 0.52% at 9.74.

Gainers on the midcap index included Boskalis Westminster, 1.65% higher to 29.53, USG People, up 1.46% to 34.15, and Tele Atlas, rising 1.28% to 16.58.

In Belgium , Brussels Shares closed slightly lower after Wall Street opened weakly on concerns over hedge-fund exposure to risky mortgage loans, with supermarket Colruyt the sharpest faller.

The Bel 20 closed down 5.18 points or 0.11% at 4641.55.

Colruyt was off 5.09 Eur or 2.97% at 166.01, whilst metals group Umicore lost 2.80 Eur or 1.74% to 158.00.

Financials were down, as KBC lost 1.05 Eur or 1.05% to 98.50 and Fortis dropped 0.17 Eur or 0.55% to 30.89. Dexia was down 0.09 Eur or 0.37% at 24.13.

Solvay was down 0.42 Eur or 0.36% at 115.50, after the chemicals group said it will increase the annual production capacity at its plant in Devnya, Bulgaria to 1.5  million metric tonnes from 1.2  million, as part of an investment plan costing 50  million Eur over three years.

Cofinimmo fell 0.14 Eur or 0.10% to 140.91. The real estate group's target price was cut to 137 Eur from 145 at Degroof.

In positive territory, utility Suez rose 0.95 Eur or 2.32% to 41.82 and telecoms group Belgacom rose 0.24 Eur or 0.72% to 33.63.

Outside the Bel 20, copper manufacturer Cumerio was suspended at 2.30 pm after rising 1.65 Eur or 7.07% to 25.00. After market close, the group said it is in 'advanced discussions' for a merger, without naming the other party.

Kinepolis closed 0.50 Eur or 1.04% weaker at 47.50. After market close, the cinema operator issued a profit warning, saying that weak ticket sales for the year to mid-May have 'only been partly offset over the past few weeks' and will affect the group's first half results next month.

Shares in automotive semiconductor manufacturer Melexis were off 0.08 Eur or 0.59% at 13.39 after KBC Securities upped its rating to 'buy' from 'accumulate' on valuation grounds due to the recent decline in the share price.

Into Switzerland where in Zurich Share prices closed near Friday's lows with Julius Baer plunging more than 4% after UBS sold its 20.7% stake in its Zurich rival.

At the close, the Swiss Market Index was down 63.78 points at 9,166.49, and the Swiss Performance Index was down 46.65 points at 7,486.93.

The Euro fell against the Swiss franc to 1.6557 SFr, while the Dollar dropped to 1.2327 SFr.

Focus here was on Julius Baer, which tumbled 4.1% or 3.65 SFr to 85.35, following yesterday's announcement by UBS of the sale of its 20.7% stake -- 5.47% back to Julius Baer and the rest via the open market.

UBS said it made a pretax book gain of around 2  billion SFr on the transaction.

The large package of shares on the market may still leave Julius Baer in the frame as a target for takeover, possibly by a US institution, said a banking analyst at Kepler.

UBS also fell, by 0.65 SFr to 75.35, while rival Credit Suisse declined 2% or 1.85 SFr to 88.90.

Novartis reversed earlier losses, up 0.05 SFr at 68.25, following a host of positive news, including EU recommendation for its generic version of blood cell drug Eopetin, manufactured by unit Sandoz.

Total sales potential for the drug is seen at 600  million SFr in Europe.

Peer Roche dropped 0.65 SFr to 212.10, after it said the European Medicines Agency suspended its license for AIDS virus treatment Viracept. The drug was recalled earlier this month after chemical impurities were found in some batches.

Elsewhere among the market's heavyweights, Nestle dropped 5.50 SFr to 451.

Chemicals continued yesterday's downturn on continued profit-taking, with Ciba off 1.5% or 1.20 SFr at 79.45 and Givaudan down 6 SFr at 1,207.

Friday's gainers included ABB up 0.20 SFr at 27.80, Richemont adding 0.30 SFr to 74.85, and Swatch up 1.25 SFr at 346.

Outside the SMI, Kuoni fell 6 SFr to 733, after announcing it is buying UK specialist travel company CV Travel, effective July 1.

Into the Nordic arena now and starting this week with Denmark where in Copenhagen Danish shares closed lower, led down by AP Moller Maersk after the group said its chief executive Jess Soederberg will be replaced by Carlsberg chief executive Nils Smedegaard Andersen. Vestas Wind Systems also weighed.

The OMXC20 index was down 4.67 points at 480.88 and the OMXCB Benchmark index shed 3.52 points to 465.17.

The OMXC All Share index closed down 3.32 points at 472.83 on turnover of 5.428  billion DKr.

AP Moller Maersk was down 1,100 DKr at 65,700 after it said Carlsberg CEO Nils Smedegaard Andersen will take over as the group's new chief executive on December 1.

Carlsberg shed 4.00 DKr to 655.00 following the announcement. The brewer said it will now initiate the process of finding a successor to Smedegaard Andersen, who has been chief executive and president of the group during the past six years.

Vestas Wind Systems was down 6.00 DKr at 364.00, extending losses yesterday on news of gear box problems affecting some of its wind mills.

According to daily Boersen, the group confirmed the problems, but said repairs are underway and added its financial guidance remains unchanged.

Novo Nordisk fell 3.00 DKr to 588.00 after its share price rose yesterday on positive phase 3 data for its diabetes drug candidate Liraglutide.

Shares in the group were upgraded to 'outperform' from 'peer perform' at Bear Stearns with a price target of 650 DKr.

Meanwhile, US investment banking peer Morgan Stanley raised its target price for Novo Nordisk to 594 DKr from 568 DKr and reiterated its 'overweight' stance.

Danisco was down 8.50 DKr at 416.50. The group's Genencor division said it has launched the new enzyme Maxaliq One for production of bioethanol.

ALK Abello gained 8.00 DKr to 1,110.00. The group's shares were upgraded to 'buy' from 'hold' at Fionia Bank on valuation grounds and as the brokerage anticipates a positive newsflow around the pharmaceutical company's pollen allergy treatment Grazax.

Sydbank shed 2.00 DKr to 266.50. Fionia Bank upgraded its shares to 'hold' from 'sell' on valuation grounds.

Coloplast was down 2.00 DKr at 458.50, Boersen said, citing Lehman Brothers, that the group would be better off selling its wound care division, as its market share is too small and market growth is slowing down.

Among other shares, Novozymes gained 13.00 DKr to 625.00, FL Smidth was up 2.50 DKr at 420.50, and Danske Bank shed 2.75 DKr to 228.00.

Across in Norway Oslo Share prices closed lower, led down by Norske Skogsindustrier following a broker downgrade, and by Prosafe, while Aker jumped after putting an end to the rampant speculation regarding the future of Aker Kvaerner.

The OSEBX Benchmark index closed 1.87 points lower at 504.45, while the OSEAX All Share index fell 1.52 points to 579.44.

Total turnover amounted to 12.24  billion NKr.

After having hit a new record high of 511.17 earlier this week, the Oslo Bors succumbed to weaker sentiment internationally to finish the week fractionally weaker.

Offshore services group Prosafe dropped 3.32% to close at 93.10, extending recent falls, while LNG shipping group Golar LNG lost yesterday's gains, finishing the week 1.46% lower at 101.

Still in the offshore services sector, Seadrill rose 1.55% to 131 on soaring day rates and on generally positive sentiment towards the offshore rig sector.

According to dealers in Oslo, Seadrill is being pushed higher by the expectation of even higher day-rates for rigs, which recently crossed the 500,000 usd per day mark, and which are expected to continue rising.

Peer Fred Olsen Energy also benefited from the positive sentiment, rising 1.47% to close at 311.50.

Seismic group Petroleum Geo-Services finished an eventful week marginally higher, up 0.2% at 153.25, having yesterday fallen 13 NKr after a broker downgrade and as the share started trading without a dividend of 10 NKr per share.

Earlier this week PGS announced the 275  million usd acquisition of Edinburgh University spin-out MTEM, which specialises in electromagnetic surveying.

Norwegian oil stocks closed the week lower, after oil fell below 70 usd a barrel as the threat to Nigerian crude exports from a general strike was judged to have eased.

Oil giant Statoil closed 0.85% weaker at 176, while oil-to-aluminium firm Norsk Hydro eased 0.33% to close at 225.50.

Hydro said it will invest 20  million Euros in new equipment at its automotive structures business in Germany, as the firm starts the turnaround of the division following the recent decision not to seek a buyer.

Oil minnow DNO, meanwhile, closed up 1.25% at 12.15, benefiting from a local newspaper report which suggested one of its key Norwegian oil assets could contain up to six times the official reserve base.

DNO has a 15% stake in the Goliath licence, while operator ENI has 65%, and Statoil ASA has 20%.

Leading the risers Friday was industrial conglomerate Aker, which jumped 4.22% to finish at 407.50 NKr after ending speculation over the future of Aker Kvaerner by transferring its 40.1% stake in the group to a new holding company partly owned by the Norwegian government.

Aker said it would transfer ownership of the stake to a new holding company called 'Aker Holding', which will be 60% owned by Aker and 30% owned by the Norwegian government.

In Sweden , markets had a Public Holiday yesterday but on Thursday The OMX Stockholm All-Share index closed down 1.82% at 409.71, while the OMX Stockholm 30 finished down 2.01% at 1,252,88.

Likewise Finland where Helsinki also took a day off yesterday and previously on Thursday The OMX Helsinki 25 ended down 0.95% at 3,296.87 and the OMX Helsinki all-share index was 1.51% lower at 11,435.30 on a 1.697  billion Eur turnover.

Down to the Mediterranean now and starting in Athens where Greek shares ended down along with the rest of Europe. The ASE general index ended 0.5% lower at 4,850.1, while blue chips were also 0.5% lower at 2,583.4. Mid caps slid 0.5% to 6,355.5, and small caps outperformed and gained 0.4% to 1,166.2.

Decliners outnumbered advancers 148 to 104, while 65 were unchanged in average trade of roughly 408  million Eur.

Hellenic Telecoms (OTE) dropped 1.4% to 22.5 Eur. Yesterday, its AGM approved a 2006 dividend per share of 0.55 Eur, a share buyback plan of up to 10% of shares, and re-nominated current CEO Vourloumis for another three-year term.

Bottler Coca-Cola HBC slid 0.6% to 33.1 Eur as it traded ex-dividend for the first day.

Investment company Marfin Investment Group (MIG) fell 16% to 13.82 Eur after recently outperforming. Its rights started trading today on the ASE in an effort to raise about 5.2  billion Eur.

Pharmaceutical and chemical company Alapis gained 2% to 8.24 Eur. It said in an exclusive interview with Thomson Financial that it will be proceeding with an 817  million Eur capital raising, and that 75% of the funds will be used for acquisitions.

Furniture and sporting goods retailer Fourlis ended 1.7% higher at 21.54 Eur. Its management said at its AGM that it expects 2007 sales to rise to 600  million Eur from 482  million in 2006, and pretax profits should come in at 50  million Eur from 47.9  million for last year.

Passenger shipper Attica Holdings gained 2% to 5.96 Eur. Sources told Thomson Financial News that the Cyprus based investment group Mitica is expected to announce to the Athens Stock Exchange today that it controls 15.4% of the company.

Shares in Greek construction group Michaniki grew 2.3% to 8.86 Eur after it was initiated with a 'buy' rating and a target price of 11 Eur at Marfin Analysis, with the broker citing its growth opportunities.

Construction group Hellenic Technodomiki rose 0.4% to 10 Eur. Management said today at its AGM that the company's current project backlog has climbed to 4.5  billion Eur.

Across to Italy where in Milan Share prices closed lower as worries over higher short and long-term interest rates prompted profit-taking ahead of the weekend, led by banks on the negative impact of higher rates on their results.

The Mibtel index lost 0.55% to 33,003 points and the S&P/Mib was off 0.60% to 42,154.

Volume was an estimated 5.521  billion Eur.

UBI lost 1.84% to 19.68 Eur, extending recent falls on lower than expected merger targets.

Citigroup reiterated its 'hold' on UBI, cutting its price target to 21.0 Eur, from a previous 23.50.

Among other banks, BPM was down 1.88% to 10.88 and Mediolanum was off 1.41% to 6.16.

Unipol fell 1.80% to 2.775 after rising sharply yesterday on the prospect of the company returning excess capital to shareholders via a buy-back or bumper dividends.

Unicredito lost 0.56% to 6.755. One broker said the 2.2  billion usd paid yesterday for Kazakh's ATF Bank was 'fair', adding that the central Asia area is likely to grow economically in the next years.

BMPS was up 0.50% 5.035, though well off its highs, after financier Romain Zaleski acquired a 2% stake. One broker said he still does not believe BMPS will carry out a merger.

Luxottica fell 1.35% to 27.83 on profit-taking after yesterday's sharp rise on positive reaction to its US Oakley acquisition.

On the positive side, Parmalat gained 1.30% to 3.2425 after winning permanent baNKruptcy protection in the New York courts in a move related to its December 2003 failure. The company has since been relisted.

In the oil sector, Saipem was up 1.15% to 24.54 and Eni fell 0.78% to 26.58. Saras eased 0.49% to 4.5925 after Goldman Sachs reiterated its 'neutral' rating on the stock.

AEM added 0.86% to 2.805. Iride fell 2.01% to 2.6525 after company officials said it wants to play a role in sector consolidation. Morgan Stanley said Iride's growth story is already priced into the stock price.

Seat PG was down 0.68% to 0.4375 after Citigroup cut the stock to 'hold', from 'buy'

And rounding out Europe this week, last but not least we go to Spain where in Madrid Share prices closed lower on continuing interest rate concerns, with constructors under pressure, while real estate companies such as Colonial extended gains.

The IBEX-35 index ended down 97.5 points at 14,784.9, after trading in a range of 14,756-14,943, on a turnover of 6.0  billion Eur.

Ongoing interest rate concerns weighed heavily on constructors, with Grupo Ferrovial falling 1.25 Eur to 71.70, FCC losing 0.05 to 67.40, Sacyr Vallehermoso down 0.63 at 36.36, and ACS slipping 0.18 to 46.34.

Property issues outperformed, with Colonial adding 0.15 or 3.64% to 4.27, Realia rising 0.11 to 6.24 and Astroc gaining 0.09 to 9.48, rebounding slightly after recent heavy losses.

Main heavyweights were lower, with Telefonica down 0.16 at 16.20, BBVA shedding 0.11 to 18.06 and Repsol YPF down 0.27 at 28.83.

SCH outperformed the main players, putting on 0.01 to 13.67, after the banking RBS consortium of which it is part said it plans to present its 71.1  billion Eur offer for ABN Amro in mid-July.

Sogecable, rose 0.05 to 30.35, benefiting from upbeat sentiment on its analogue and pay-TV prospects, outperforming other broadcasters as Telecinco shed 0.28 to 20.48, and Antena 3 was 0.20 lower at 15.22.

Also among selected gainers, BME added 0.07 to 44.50, amid continuing sector consolidation hopes following indications of takeover moves on the Italian bourse.

UK Market - Enterprise Inns was the biggest faller as the FTSE 100 closed lower for a fifth consecutive session.

Its shares lost 2.6% to 674p after Numis Securities said it could take until the end of the year before the pub company finds out if it is allowed to adopt real estate investment trust (Reit) status without having to split itself in two.

Enterprise is talking to HM Revenue & Customs about whether it can include the money that landlords pay for beer, known as “wet rent”, to allow it to convert into a Reit. To become a Reit, a company must generate 75% of its turn-over from rental income.

In the wider market, London’s miserable run continued. Unsettled by a weak opening on Wall Street, the FTSE 100 closed down 28.6 points, or 0.4%, at 6,567.4, taking its losses over the week to 165 points, or 2.5%. Elsewhere, the FTSE 250 eased 28 points, or 0.2%, to 11,589.1, taking the loss for the week to 410.5 points, or 3.4%.

Brewer Scottish & Newcastle dipped 1.7% to 636p as takeover rumours faded. “The resignation of Carlsberg CEO [Nils Smedegaard Andersen] probably highlights that the acquisition of S&N by Carlsberg is not imminent,” Merrill Lynch said.

National Grid was also under pressure, losing 1.8% to 719½p after Goldman Sachs slapped a sell rating on the utility company, citing valuation and the fact that National Grid is unlikely to be a bid target.

On a brighter note, Tesco rallied 2.1% to 430¾p after Cazenove reiterated its “outperform” rating. But that still left the shares down 6.4% on the week after disappointing figures on Tuesday. Cazenove said the share price weakness had created an excellent buying opportunity.

In the same sector, Home Retail Group rose 2.7% to 451p on private equity bid rumours.

BAE Systems added 1.3% to 438¾p in the wake of Thursday’s after hours news that its acquisition of Armor Holdings had been approved by the US Committee on Foreign Investment (CFIUS).

Morgan Stanley responded to the news by reiterating its “outperform” rating. “The speedy CFIUS review supports our stance that a full-blown investigation by the DoJ into BAE’s historical dealings with Saudi Arabia is unlikely.”

Unilever, the Anglo-Dutch consumer goods group, rose 1.6% to £15.64 as traders took the view that it could be the next company to be targeted by an activist investor.

Overnight in the US it emerged that Nelson Peltz, the corporate raider, had picked up a 3% stake in food company Kraft.

Traders believe Unilever could be vulnerable to calls from activist investors to demerge either its food or personal care business.

Elsewhere, the strong run of fund manager Invesco continued. The shares gained a further 2% to 649p, taking its gains this week to 4.6%.

Traders reckoned Invesco is behaving like a company that has received a takeover approach.

Among the mid caps, Petrofac, the oil field services company, advanced 4% to 457½p after Cazenove said Monday’s trading update could trigger earnings upgrades.

FKI added 1.4% to 126¾p amid talk that an increased offer for the engineering company could soon be made.

Chip designer ARM Holdings added 3% to 143¾p on talk that its ARM11 designs are likely to be an integral part of Apple’s iPhone, which goes on sale in the US next week.

Other companies which could benefit from the hype surrounding the iPhone launch are Wolfson Microelectronics, off 0.7% at 290¾p, and possibly Vodafone, down 0.5% at 156p. Apple is yet to strike a deal with a UK partner but according to Oriel Securities it would boost Vodafone shares – were it to win the contract.

Japan & Asia Pacific - Most Asian markets declined Friday, with Chinese shares tumbling amid worries that authorities might announce new measures this weekend to rein in sizzling stocks. But Hong Kong shares rose to a new record.

The mainland's benchmark Shanghai Composite Index fell 3.3% to 4,091.45, while the smaller Shenzhen Composite Index dropped 4.6% to 1,187.95.

Turnover was moderate on both indexes as investors were cautious about a possible interest rate hike or other market cooling measures. The government traditionally waits until the weekend to announce such policy tweaks.

Shandong Lukang Pharmaceutical fell 10% to 7.44 Yuan, while agricultural-to-chemical conglomerate Gansu Yasheng Industrial (Group) also shed 10%, to 9.33 Yuan.

Asia's biggest bourse in Japan broke a six-session rally. The Nikkei 225 index shed 51.67 points, or 0.28%, on the Tokyo Stock Exchange to 18,188.63 points. Investors took profits after the market reached a seven-year high the previous day.

The broader Topix index fell 0.6% to 1,777.99.

Among the hard hit sectors was banking, down 1.6%. Mitsubishi UFJ Financial Group, Japan’s biggest lender, fell 1.4% to Y1.38m. Mizuho Financial, its biggest rival, sank 1.9% to Y874,000.

Property stocks fell heavily on fears of rising interest rates, as property developers are often heavily leveraged. The Tokyo Stock Exchange’s real estate sector sank 2.8%, while its real estate investment trust index sank 1.7%. Mitsui Fudosan, Japan’s biggest property company, fell 3.0% to Y3,530. Second-ranked Mitsubishi Estate dropped 3.9% to Y3,410.

But some chip-related stocks bucked the trend, building on Thursday’s rises after an overnight advance in their US counterparts kept the momentum going. Advantest, the chip-testing equipment maker, surged 3.6% to Y5,490.

EAccess ended 3.5% higher at Y76,300 after surging as much as 10.7% earlier in the day on its announcement that it was in talks with Softbank to form a Wimax joint venture, involving ultra high-speed internet access for mobile devices. Softbank fell 1.6% to Y2,775.

The Mothers market of smaller growth stocks edged up 0.3% to 945.14. The rival Jasdaq market rose 0.3% to 83.19.

Hong Kong shares rose for the sixth consecutive session as investors shrugged off declines in the mainland's stock markets on concerns over more tightening measures. The blue-chip Hang Seng Index advanced 45.24 points, or 0.21%, to a record closing high of 21,999.91.

China Mobile, the second-largest constituent of the benchmark index, led the gains with a 2.8% rise to HK$84.65. Investors were upbeat about earnings growth prospects in the coming years for China's largest mobile operator by subscribers.

Thai shares declined 0.5% at 772.05 in moderate trade, with analysts saying the market is in consolidation mode after recent steep gains.

Indonesia shares closed flat in thin volume at 2,152.321, compared to the previous close of 2,152.340.

Malaysian shares closed up 0.3% at a record high of 1,391.57 in heavy volume as local and foreign funds snapped up plantation stocks and index heavyweights.

Philippine shares dropped, dragged down by property and bank stocks. The benchmark 30-company Philippine Stock Exchange Index lost 13.43 points, or 0.4%, to close at 3,701.16. The bourse hit a record high on Thursday.

South Korean stocks ended lower, with the Korea Exchange Bank hit by news its largest shareholder, Lone Star Funds, sold part of its stake in the bank. The Korea Composite Stock Price Index, or Kospi, ended down 23.26 points, or 1.3%, at 1770.98.

Shares fell following a sharp decline in the Chinese market, and traders said the island's benchmark index will likely come under pressure as investors take their money elsewhere. The Straits Times Index closed down 24.11 points, or 0.66%, at 3615.38.

Taiwan shares fell slightly on profit taking after four consecutive winning sessions. The Weighted Price Index of the Taiwan Stock Exchange dropped 5.60 points, or 0.1%, to close at 8,846.39 in heavy volume.

Indian shares moved down Friday, dragged by index heavyweight Reliance Industries, as investors booked profit on gains in the last three sessions.

The Bombay Stock Exchange's 30-share Sensex index lost 32 points, or 0.2%, to 14,467 points.

On the broader National Stock Exchange, the 50-company S&P Nifty index fell 15 points, or 0.4%, to end at 4,252 points.

Reliance Industries Ltd. fell 1.7% to 1,704 rupees after a court ruled that it can sell gas from its offshore basin in eastern India only to Reliance Natural Resources and state-run National Thermal Power Corporation and barred it from selling gas to any other company.

Among the other losers were technology stocks, Infosys Technologies Ltd. closed down 0.3% at 1951 rupees, Tata Consultancy Services Ltd. fell 0.4% to 1,140 rupees and Wipro Ltd. declined 1.3% to 517 rupees.

Australian shares fell on Friday, weighed down by losses in Caltex Australia Ltd. after its refining margins missed expectations, while Bendigo Bank fell after it rejected a bid from a rival.

But stocks sensitive to global growth, such as BHP Billiton Ltd., continued to gain on an improving outlook for global economies, while WorleyParsons Ltd. climbed on an analyst upgrade, keeping losses in the broader market in check.

The benchmark S&P/ASX 200 index fell 0.1%, or 4.4 points, to 6,382.6, based on the latest available data, after slipping 0.15% in the previous session.

Despite posting two straight session of losses, the index rose 1.4% on the week, taking its total gains since the start of the year to 12.6%.

Caltex Australia tumbled 10.4% to A$25.10, posting its biggest one-day%age fall in nearly six years, despite flagging a half-year profit rise of up to 46%. Analysts said its refining margins appeared to be below expectations.

Bendigo Bank lost 5.9% to A$15.41 after Bank of Queensland Ltd. said it was dropping its A$2.7 billion ($2.3 billion) bid. Bendigo rejected sweetened terms, dealing a blow to long awaited industry consolidation.

Bank of Queensland was down 0.9% at A$17.65.

Other decliners included Brambles Ltd., the world's top pallet supplier, which fell 1.9% to A$11.85, adding to a 4.4% fall on Thursday, after the company's latest sales growth figures for Europe fell below market expectations.

On a more positive note, WorleyParsons Ltd. climbed 3.5% to A$31.0. Goldman Sachs JBWere upgraded earnings forecasts for the engineering group, citing a continued positive operating environment.

Top miner BHP Billiton shrugged off weaker base metal prices to rise 0.8% to A$35.38, but its main rival Rio Tinto Ltd. fell 0.6% to A$98.90.

Flight Centre Ltd. surged as much as 6% to A$20.05, adding to a 3.2% gain in the previous session after it said Pacific Equity Partners would buy a 30% stake in a joint venture with it for A$195 million ($164 million). Flight Centre, which also upgraded its full year profit outlook, closed up 4.4% at A$19.74. 

In New Zealand The sharemarket drifted for a second consecutive session in line with weaker European and Australian markets.

The benchmark NZSX-50 closed down 15.42 points or 0.3% at 4285.14. Falls outnumbered rises by 65 to 38 among the 142 traded and turnover was worth $126 million.

Trustpower, rose 5c to 850 as it announced interim resource consent approval for a small hydro project in Marlborough.

Contact Energy, which got the nod Friday to build a hydro project in central Otago today, fell 5c to 905.

Market leaders also tumbled: Fletcher Building slid 8c to 1270, and Sky City edged down 4c to 501, as did Telecom to 459.

Other moves included Nuplex up 15c to 715, Tenon up 14c or 6% to 260, Dorchester Pacific down 14c or 7% to 170, Cavalier down 10c to 225 and Pyne Gould Corporation down 9c to 455.

Commodities - Commodity markets saw volatile trading this week with oil and wheat prices experiencing sharp swings while base metals displayed resilience in spite of a rise in risk aversion.

This week’s general strike in Nigeria has not affected oil shipments but traders remain concerned about the possibility of supply disruptions from the world’s eighth-largest crude exporter.

ICE July Brent rose $1.10 to $71.32 a barrel on Friday, 0.2% lower this week while Nymex August West Texas Intermediate added 63 cents at $69.28 a barrel, up 1.9% this week.

Upward price pressure was dented in the middle of the week by a huge rise of 6.9m barrels in US crude stocks to a nine-year high. The Organisation of the Petroleum Exporting Countries’ insistence that oil supplies remain adequate was bolstered by the jump in crude stocks but analysts warn the market is actually tightening significantly.

The tightening supply/demand balance has led Calyon to revise its oil price forecasts higher with Brent expected to average $69.33 in the third quarter and $65.50 in the fourth quarter.

US petrol prices stayed firm with Nymex July RBOB 2 cents higher at $2.2670 a gallon on Friday, up 0.3% this week, amid continuing concerns about US supplies over summer as maintenance work and production problems weigh on the refining system with refinery utilisation currently running 7.5% below its five-year average.

US wheat prices retreated modestly from last week’s 11-year high amid profit-taking after Australia said its harvest would double this year. However, global wheat stocks are expected to shrink to a 30-year low and the US winter harvest remains behind schedule. CBOT July wheat fell 9½ cents to $5.96½ a bushel on Friday, down 1.6% this week.

Improving weather conditions for growing led to pressure on corn and soyabeans prices which fell 11.2% to $3.72 a bushel and 5.5% to $8.01 a bushel this week, respectively.

In base metals, lead set a series of records thisweek, ending at $2,540 a tonne and gaining 6.9% this week. Low stocks, concerns about Chinese supplies and increased speculative buying have propelled lead higher. But analysts are concerned lead might mimic nickel, which slumped 11.3% to $37,600 a tonne this week, when supply tightness eases. Copper traded in a range this week, ending 1.2% lower at $7,440 a tonne, as strike threats in Latin America continued.

Gold closed the week at 653.

Currencies - A fresh wave of selling sent the beleaguered yen down to multi-year lows against a raft of currencies this week.

The yen dropped to a record low against the Euro, a 20-year trough against the New Zealand Dollar and 15-year and 4½-year lows against Sterling and the Dollar, respectively.

A rebound in risk-seeking behaviour among investors fuelled appetite for carry trades, in which the purchase of riskier, high-yielding assets is funded by selling the low-yielding yen.

Carry trades and the outperformance of high-yielders at the expense of the yen remains an overarching theme in the FX markets.

June is bonus season in Japan and this year has seen record payments, a good proportion of which analysts believe have been funnelled abroad in search of yield.

Over the week, the yen fell 0.5% to Y124 against the Dollar, dropped 1% to Y166.70 against the Euro and lost 1.6% to Y247.70 against the Pound.

Meanwhile, the New Zealand Dollar, which with interest rates at 8% has been one of the main beneficiaries of the carry trade, rose 2.1% to Y95.02 against the yen and 1.6% to a fresh 22-year high of $0.7680 against the Dollar over the week.

This was in spite of rumours that the Reserve Bank of New Zealand had stepped in to sell the currency on Monday, following its first wave of intervention the previous week.

Like the yen, the Swiss franc and the Taiwan Dollar have been favourite funding currencies among carry trade investors.

However, the Swiss franc rose 0.7% to SFr1.2320 against the Dollar and 0.3% to SFr1.6560 against the Euro this week, as the Swiss National Bank increased short-term interest rates following above-forecast inflation data.

Meanwhile, the Taiwanese Dollar rose 1.2% to T$32.75 against the Dollar after the Taiwanese central bank raised interest rates by 25 basis points to 3.125% and increased the reserve requirement for foreign currency deposits.

Analysts had been expecting a 12.5bp rise.

Elsewhere, the Dollar traded in a tight range against the Euro, easing 0.4% to $1.3430 over the week, but it dropped 1.1% to $1.9970 against the Pound after the minutes from the Bank of England’s June Monetary Policy Committee meeting heightened expectations for a UK interest rate rise in July.

Sterling fell 0.7% to £0.6728 against the Euro on the week.

The Swedish krona also performed strongly, rising 1.8% to SKr9.2440 against the Euro and 2.2% to SKr6.8780 against the Dollar on the week as the country’s central bank sounded a more hawkish note than expected after raising interest rates by 25bp to 3.5% on Wednesday.

The South African rand was slightly softer during the afternoon on Friday, but remained within range in very thin conditions.

In late afternoon trade the rand was bid at R7,1332 per Dollar from its previous close of R7,1282. It was bid at R9,5991 to the Euro from a previous R9,5567 and at R14,2560 against Sterling from R14,2058 before.

The Canadian Dollar broke its two-day losing streak against the greenback on Friday, closing higher on renewed buying interest and technical moves.

The Canadian Dollar closed at C$1.0696 to the U.S. Dollar, or 93.49 U.S. cents, up from C$1.0747 to the U.S. Dollar, or 93.05 U.S. cents, at Thursday's close.

The Australian Dollar has hit a new 18 year high Friday. The currency ended the week on an upward note as carry traders continued to sell the low-yielding Japanese yen for high interest rate money.

On Friday, the Australian Dollar traded between a low of 84.62 US cents and a high of 84.93 cents, the highest rate since February 16, 1989, when it reached 86.46 cents.

Here in China, the RMB closed out the week at 7.6220 against the US Dollar.

China - CState-owned companies and government agencies in Shanghai, including those responsible for education and pensions, misappropriated Rmb6.3bn for illegal investment in the stock market over the past three years, according to a senior judge at the city’s highest court.

Qi Qi, deputy director of the Shanghai High People’s Court, said the diversion of funds into equities was the result of weak controls over public spending and could undermine confidence in the stock market.

“This is becoming a major threat to the stability of the market and to investment funds,” he said. “Moreover, the volatility of stocks can cause huge losses for public finances.”

His outspoken comments are the most authoritative confirmation yet that the spectacular boom in the mainland stock market over the past two years is not just the result of funds coming from millions of new individual investors, but also reflects large speculative investments by different branches of the government.

Chinese share prices are up 60% this year, on top of 130% in 2006.

Fraser Howie, co-author of a book on the Chinese stock market, believes undisclosed public investment in equities could be as high as $125bn (€93bn, £63bn) although he says it is impossible to prove the figures.

Economists fear that a substantial stock market fall could lead to calls on the authorities to bail out different government units.

“There has not been any effective mechanism in the country to supervise the operation and management of public funds, and as a matter of fact it is difficult to curb their malpractices,” Mr Qi said. The judge said the figures were based on an analysis of 105 embezzlement cases accepted by Shanghai’s courts between 2003 and 2006. About Rmb4.1bn ($539m, €402m, £271m) of the illegally invested funds had come from 69 different state-owned companies.

The other government units involved included agencies responsible for social security, education, housing maintenance and public utilities. Most are allowed to put some funds into government bonds, but not equities.

Mr Qi’s comments were initially made to a number of Chinese newspapers at a briefing on Tuesday. The court yesterday confirmed his comments and said they were a warning to investors about the potential risks in the market. The Shanghai government did not respond to requests for comment.

The revelations by the court follow a corruption scandal in Shanghai last year where officials were accused of siphoning off part of the city’s pension fund.

Earlier this week the banking regulator said it would fine eight banks for lending Rmb5.1bn to two Chinese state-owned companies, which had illegally used most of the funds to invest in equities. The announcement was seen as a warning to other companies.