Banks weigh on European stocks

European equity markets pared their morning gains on Friday, as banks weighed and US futures pointed to a weak start on Wall Street.

In mid morning trade, the FTSE Eurofirst 300 was up 0.1 per cent to 1,298.16, Frankfurt's Xetra Dax added 0.3 per cent to 6,754.41, the CAC 40 in Paris fell 0.1 per cent to 4,716.91 and London's FTSE 100 was flat at 5,723.5.

Sacyr Vallehermoso, the Spanish construction group, rose 4.8 per cent to EU20.47 on reports it was in talks to sell its 33.3 per cent stake in French rival Eiffage to a consortium of French insurers including Axa and CNP Assurances.

Shares in Eiffage were up 2 per cent to EU58.81 after reporting forecast-beating fourth-quarter sales.

CNP, meanwhile, fell 12.9 per cent to EU67.41 after missing expectations with its full-year sales. Shares in Axa edged 2.4 per cent lower to EU21.53.

Luxottica, the Italian designer eyewear group, was up 5.9 per cent to EU17.62 partially recovering from its losses on Thursday when its cautious outlook for 2008-9 disappointed investors.

Alcatel (NYSE:ALA)-Lucent bought some much-needed cheer to the technology sector after reporting stronger-than-expected fourth-quarter sales growth, which offset concerns about its 2008 outlook.

"Strong sales carried the quarter," said S&P Equity Research analyst Clara Van der Elst. "While we expect poor telecom equipment market conditions to continue in 2008, we believe Alcatel is on track to execute its merger and restructuring plans."

The French telecoms equipment group reported a net loss for the quarter, but this was largely due to a one-off writedown. The company also suspended its dividend payment, but the shares gained 2.2 per cent to EU4.22.

TeliaSonera, the Swedish telecoms group, fell 9.3 per cent to SKr51.25 after disappointing investors with the announcement it would rather use excess capital for investment opportunities than returning it to shareholders.