LONDON: European equities scraped back some lost ground on Friday as officials in Lisbon moved to allay fears of a potential Portuguese banking crisis.
London's FTSE 100 closed with a gain of 0.27 percent at 6,690.17 points, Frankfurt's DAX 30 tacked on 0.07 percent to 9,666.34 and the Paris CAC 40 won 0.35 percent to 4,316.5 points.
Milan stocks were up by 0.62 percent while Madrid gained a slight 0.05 percent.
In Portugal, Lisbon's PSI 20 index edged 0.62 percent higher to 6,142.87 points, a day after it shed 4.18 percent.
In New York, share indices were mixed in midday trading, with the Dow Jones Industrial Average showing a decline of 0.19 percent at 16,882.62 points.
The broad-based S&P 500 was off by 0.15 percent at 1,961.80, while the tech-rich Nasdaq Composite Index had gained 0.10 percent to 4,400.49 points.
European equities suffered losses during the week, and especially on Thursday as troubles at Portugal's largest listed lender, Banco Espirito Santo (BES), raised fears of a possible default and a return to the dark days of the eurozone debt crisis.
"European stock markets rebounded on Friday, attempting to end a somewhat turbulent week in the black as traders demonstrate relative calm following ominous rumbles from Portugal's bank sector," ETX Capital analyst Daniel Sugarman commented.
Portuguese Prime Minister Pedro Passos Coelho insisted Friday that the government would not have to bail out BES.
"There is no reason for the state to intervene in a bank which has solid capital and which has a comfortable margin to deal with any eventuality, even the most adverse," he told reporters.
The Portuguese financial market regulator lifted its suspension in trading of BES shares, meanwhile.
They were immediately treated to a wild roller coaster ride, and closed with a heart-thumping loss of 5.5 percent at 0.48 euros.
On Thursday, the issue had plunged by a sickening 17.24 percent before being suspended from trades.
BES has 'limited' impact:
"Investor sentiment has stabilized after Portuguese bank concerns sparked sharp declines in European and US equities," said Barclays analyst Sreekala Kochugovindan.
"From the view point of the banking system as a whole, we think the sovereign financial implications of the Espirito Santo saga are limited."
Concerns that BES's troubles could have a wider impact on Portugal which only two months ago exited a three-year, 77-billion-euro ($106 billion) international bailout sent shockwaves through global markets on Thursday as questions resurfaced over eurozone debt.
The Portuguese bank has been undermined by suspicion that its holding company, Espirito Santo International (ESI), covered up a 1.3-billion-euro hole in the accounts.
That had also driven up the interest rates, or yields, on bonds issued by indebted peripheral eurozone countries, but they eased back on Friday.
The rate on benchmark 10-year Portuguese bonds stood at 3.866 percent on markets that trade government debt, compared with 3.985 percent on Thursday.
Oil, euro slide lower:
Elsewhere, oil prices eased as fears receded about major supply disruptions in the Middle East, analysts said.
The International Energy Agency also cut Friday its 2014 forecast for oil demand to 92.7 million barrels a day owing to weaker than expected global economic growth.
In London, Brent North Sea for delivery in August slid $1.68 to stand at $106.99 a barrel in late trading.
US benchmark West Texas Intermediate for August reversed $1.58 to $101.35 per barrel compared with Thursday's close.
In foreign exchange deals, the European single currency fell to $1.3596 from $1.3609 in New York late on Thursday.
The British pound eased to $1.7102 from $1.7133 the day before. The euro edged higher to 79.50 pence from 79.42 pence.
In commodity deals, gold dipped to $1,335.00 an ounce from $1,340.25 on Thursday.
The precious metal, regarded as a safe bet in times of economic uncertainty, had forged a four-month peak of $1,345.46 on Thursday attaining a level last seen on March 17.
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