European stocks fell slightly on Friday as worries about the eurozone intensified ahead of debt auctions next week, and US data showed far fewer jobs were created in December than forecast. The FTSEurofirst 300 index of top European shares fell 0.25 percent to close at 1,144.39 points. Over the week, the index gained 2 percent and is up more than 77 percent from its lifetime low in March 2009.
The eurozone debt crisis "will surface as an investor concern this quarter," said Colin McLean, managing director at SVM Asset Management in Edinburgh. "Portugal will have to access the stability fund." Banks to fall included BNP Paribas, Banco Santander, BBVA and Societe Generale, down between 2.2 and 3 percent. Sentiment on the sector was also affected by bank shares leading Wall Street lower on Friday after a court ruling voided foreclosures on two homes, which may cause sales of other foreclosed properties to be invalidated.
Across Europe, Britain's FTSE 100 and Germany's DAX fell 0.6 and 0.5 percent respectively. France's CAC40 was 1 percent lower, Spain's IBEX35 was off 1.5 percent and Portugal's benchmark dropped 3 percent. Portugal, Spain and Italy are next week scheduled to hold their first bond auctions of the year. Adding to the gloom, concern is growing about Belgium's ability to manage its public debt after its latest efforts to form a government collapsed.
"The rising yields at debt auctions in the eurozone will continue to spook investors, and it's best to stay away from peripheral stocks such as Spanish and Portuguese banks until mid-year when the crisis should ease," said Arnaud Scarpaci, fund manager at Agilis Gestion, in Paris.
Most mining shares lost ground, with Xstrata, BHP Billiton, Vedanta and Anglo American down between 0.9 and 1.8 percent, falling along with metal prices, hit by a stronger US dollar and talk of tighter monetary policy in China. Imperial Tobacco and British American Tobacco fell 1.8 and 2.2 percent respectively as Citigroup cut ratings for both firms to "hold" from "buy", in a sector review.
Auto shares were among the gainers. Porsche rose 5 percent after Credit Suisse added the company to its focus list. Fiat Industrial, recently spun out of Fiat, rose 6.1 percent European equities can "still progress" said McLean. "Money is still being pumped in. I expect profits growth as companies improve margins. Valuations are not stretched."