The European markets ended Friday's trading session with mixed results. The markets managed to overcome early weakness and climb into positive territory in the afternoon. Investors have been closely following the developments in Cyprus as the country's government debates ways to raise 5.8 billion euros in the next three days.
The Cyprus government is in hard negotiations with the Troika to reach a solution on bailout terms, government spokesman Christos Stylianides said Friday. The country must find a way to raise EUR 5.8 billion in the next three days, which is a pre-requisite to receive the EUR 10 billion bailout from EU and the International Monetary Fund, rumors are rife that the country's leading lender Popular Bank, or Laiki Bank, is set to close down.
The news triggered public alarm and saw individuals queuing up in front of cash machines to withdraw their savings as much as possible. However, the bank yesterday imposed a limit of 260 euros a day on ATM withdrawals. Fearing closure, hundreds of bank employees and bondholders took to the streets on Thursday.
Nonetheless, the central bank refuted the rumors. Central Bank of Cyprus spokesperson Aliki Stylianou told the state-run Cyprus Broadcasting Corporation that the reports were unfounded and efforts are under way to find the best possible solution.
She said that authorities are working on a plan to restructure the bank to protect insured deposits of up EUR 100,000. These deposits, along with good loans and some other assets, will be categorized as 'good bank' and transferred to the Bank of Cyprus.
Meanwhile, uninsured deposits above EUR 100,000 will go to the 'bad bank' and will remain frozen, the CYBC report said. This, in effect, results in the merger of the two banks leading to a downsizing of the Cypriot banking system. This is one of the key conditions set by the EU in exchange of the bailout.
Cypriot Finance Minister Michalis Sarris, who was in talks with Russian authorities for a possible financial aid, left Moscow on Friday after failing to secure funding. Cyprus had offered assets in return for cash.
Cyprus agreed with Greece to spin off the Greek branches in Cypriot banks. During a communication between Cyprus President Nicos Anastasiades and the Prime Minister of Greece Antonis Samaras, the regulation of the matter of alienating Greek branches of Cyprus banks was confirmed, with the most beneficial terms under the circumstances and with an important benefit for the Cypriot side, the Cyprus Presidency said in a statement.
The continuing slump in Eurozone's private sector activity suggests that even before the recent developments in Italy and Cyprus the economy may be heading for another contraction in the first quarter, though at a slower rate, denting hopes for a recovery, Capital Economics European Economist Ben May said Friday.
According to the economist, the quarterly average reading of the composite output index for the euro area is consistent with a GDP fall of around 0.3 percent in the first quarter, which is slower than the 0.6 percent decrease seen in the fourth quarter.
The French economy will likely stagnate in the first quarter, continuing the trend started two years ago, as consumers' purchasing power remains muted and investments continue to weaken. At the same time, the country's unemployment is seen rising sharply in the early months of 2013, a report from statistical office Insee showed Friday.
The economy is forecast to record nil growth in the first quarter, following the fourth quarter's 0.3 percent contraction. In the previous estimate, the economy was forecast to grow 0.1 percent in the first quarter. Further, gross domestic product is seen recording a modest growth of 0.1 percent in the second quarter, which is in line with the initial projection.
The Euro Stoxx 50 index of eurozone bluechip stocks increased by 0.01 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 0.03 percent.
The DAX of Germany dropped by 0.27 percent and the CAC 40 of France fell by 0.12 percent. The SMI of Switzerland decreased by 0.23 percent, but the FTSE 100 of the U.K. gained 0.07 percent.
In Frankfurt, Lanxess declined by 4.72 percent. Merrill Lynch downgraded the stock to ''Neutral'' from ''Buy.''
Gerry Weber fell by 2.77 percent, following a broker downgrade.
Air Berlin, which received a positive broker recommendation, decreased by 4.07 percent.
Pfeiffer Vacuum, which announced annual results, lost 4.96 percent.
E.ON increased by 1.24 percent. Exane BNP upgraded the stock to ''Neutral'' from ''Outperform.''
Gagfah, which posted annual profit, climbed by 6.31 percent.
In Paris, GDF Suez rose by 2.61 percent. HSBC increased its rating on the stock. Essilor International is added 3.14 percent.
Societe Generale and BNP Paribas declined by 2.52 percent and 2.01 percent, respectively. Credit Agricole lost 1.17 percent.
In London, BP gained 1.85 percent. BP announced a share repurchase program with a total value of up to $8 billion. BT Group added 3.91 percent.
Petrofac dropped by 3.66 percent, after HSBC cut the stock to ''Underweight'' from ''Neutral.''
Germany's business confidence deteriorated unexpectedly in March after hitting a ten-month high in the previous month as the turmoil triggered by Cyprus' bailout debacle and the political uncertainties in Italy hurt sentiment in the largest euro area economy.
The headline business climate index dropped to 106.7 in March from 107.4 in February, which was the highest reading in ten months, data from the Ifo Institute showed Friday. The index was expected to rise to 107.8 in March. The indicator dropped for the first time in five months.
Germany's leading economic indicator improved for the second consecutive month in January largely on strengthening consumer confidence, the Conference Board said in a report on Friday.
With large positive contributions from consumer confidence and the yield spread more than offsetting negative contributions from new orders in investment good industries, the leading index gained 0.3 percent in January. The index climbed 0.5 percent in December and declined 0.3 percent in November.
Business confidence in France remained unchanged in March after improving in the previous month, and was below economists' forecast, latest data showed Friday.
The business confidence index for the manufacturing sector remained steady at 90 in March, and was far below its long-term average, statistical office Insee said. In January, the reading was 87. Economists had forecast the index to rise to 91 in March.
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Market Analysis
May 15, 2026 15:25 ET Apart from the confirmation of Kevin Warsh as the next Fed chair, the main news on the economics front this week included key price data from the U.S. and the first quarter economic growth figures from major economies. Both consumer prices and producer costs have started to reflect the effect of supply shocks due to the Middle East conflict. In Europe, GDP data was in focus, while inflation data from China dominated the news flow in Asia.