European stocks ended slightly higher on Friday, but posted their first weekly loss in a month as the return of worries over the eurozone debt crisis prompted investors to book recent lofty gains on peripheral equities. Food and beverage stocks featured among the top gainers after the world's No 1 food group Nestle reported forecast-beating quarterly sales, sending its shares up 2.4 percent.
The FTSEurofirst 300 index of top European shares ended 0.3 percent higher at 1,131.72 points, while posting a loss of 1.5 percent for the week. The Thomson Reuters Peripheral Eurozone Countries Index fell 0.8 percent on Friday following Moody's downgrade of Ireland's debt rating and on growing concerns that Greece won't be able to avert a debt restructuring.
"Down the road, a Greek debt restructuring seems inevitable, and it looks like they are trying to slowly prepare the market for it. Would it be the end of the world? I don't think so," said Patrice Perois, trader at Kepler Capital Markets in Paris. The head of the eurozone bailout fund EFSF, Klaus Regling, said in comments released on Friday that he saw no need for a quick restructuring of Greece's debt.
"Markets are convinced Greece will not be able to handle its debt at some point," he told the Frankfurter Allgemeine Zeitung newspaper. "But we know that markets can be wrong and are very volatile," he added. Greece's main stock index dropped 1.3 percent, while the Greek/German 10-year government bond yield spread widened sharply. But despite its 2.9 percent retreat this week, the Thomson Reuters Peripheral Eurozone Countries Index is still up nearly 16 percent so far this year, outpacing the broader European equity indexes.
The recent pull-back has been seen as a bit of profit taking rather than a the return of investor's risk aversion, a sentiment confirmed by the sharp drop in the Euro STOXX 50 volatility index. Europe's main fear gauge hit a near-four month low on Friday.
Around Europe, UK's FTSE 100 index gained 0.5 percent, Germany's DAX index rose 0.4 percent, and France's CAC 40 added 0.1 percent.
Ludovic Djebali, head of sales for UK, France, Benelux and Southern Europe at Source, a provider of European exchange-traded funds (ETF), said data shows significant outflows from European ETFs tracking euro zone benchmarks such as the Euro STOXX 50 so far this year, while ETFs tracking the broader STOXX 600 index have seen inflows. "One of the major themes we've seen has been a spike in buying of ETFs tracking Russian equities as investors look to play the oil and gas story on different fronts," he said.