European stocks up

European stocks closed higher on Friday, helped by rallying tech and mining shares, but ended the week down nearly 4 percent on US recession worries and as fresh fears over the fate of bond insurers hammered banking shares. The FTSEurofirst 300 index of top European shares closed 0.5 percent higher at 1,302.36 points. Europe's benchmark index lost 3.7 percent on the week.
"There is certainly the feeling that this week's trading has done little to inspire confidence that we are definitely over the worst," David Jones, chief market strategist at IG Index, wrote in a note.
News that Moody's Investors Services cut its triple-A ratings for "monoline" bond insurer XL Capital Assurance, a unit of Security Capital Assurance, heightened fears of more write-downs for banks. French bank Credit Agricole lost 4.1 percent, Fortis dropped 1.5 percent and BNP Paribas shed 2 percent.
Problems for bond insurers became the latest blow to European shares when US bond insurer Ambac lost its vital triple-A credit rating from Fitch Ratings last month, putting at risk billions of dollars of corporate and municipal bonds covered by the company.
Monoline insurers underwrite securitised debt products, which effectively transfers the triple-A ratings the insurers have to the repackaged debt securities that typically comprise tranches of risk well below the very highest grade. If the insurers lose their top ratings, so do the bonds they have underwritten.
On the upside, mining shares gained ground, rising along with buoyant base metal prices. Anglo American gained 3.5 percent and Rio Tinto added 2.1 percent. Tech shares were also on the rise, reversing some of their recent sharp losses. Nokia rose 3.1 percent and Ericsson gained 3.3 percent.
Tech stocks tumbled on Thursday after bearish comments from US group Cisco and German chipmaker Infineon. Drugmakers moved into the opposite direction, with GlaxoSmithKline losing 0.7 percent on a flurry of brokerage price target cuts after Thursday's shock warning from the group that earnings will fall in 2008.
Peer AstraZeneca, which issued a downbeat outlook last week, fell 1.6 percent and Roche slipped 0.8 percent. Nordic telecoms group TeliaSonera tumbled 10.6 percent after posting unexpectedly weak earnings and disappointing investors with a goal to only keep margins at recent levels.
The FTSEurofirst 300 index has lost nearly 14 percent so far in 2008, hit by fears that the US economy could tip into recession. "The leading indicators continue to deteriorate around the globe, in some cases strongly," Gerhard Schwarz, head of global equity strategy at UniCredit, said in a note.
"In this environment, current valuations have lost importance as a support factor; the fears of a profit recession have increased substantially since the beginning of the year." Around Europe, Germany's DAX index gained 0.5 percent, UK's FTSE 100 index .FTSE rose 1.1 percent and France's CAC 40 .FCHI fell 0.3 percent.