--European stocks mildly higher; mixed results across Europe
--Greece concerns fade but analysts warn they could resurface
--Telecom Italia surges but Lloyds Banking Group slumps, weighing on London's FTSE 100
LONDON (Dow Jones)--European stocks posted mild gains Friday with positive earnings from Telecom Italia proving to be a welcome surprise, but Lloyds Banking Group shares slid after it posted less than pleasing results.
Concerns about Greece have receded somewhat after it managed to negotiate its second bailout deal and investors are now looking ahead to the second longer term refinancing operation from the European Central Bank.
In addition, Greece's parliament Thursday approved the private sector involvement program which includes collective action clauses. But Deutsche Bank strategist Jim Reid warned, "Greek developments still need close monitoring as we move on to the execution phase. Greece still has plenty to do before it gets the required funding to meet the March 20 redemptions of EUR14.5 billion."
The benchmark Stoxx Europe 600 index was 0.2% higher at 264.63. London's FTSE 100 was 0.1% higher at 5943.47, underperforming its peers. Frankfurt's DAX gained 0.9% to 6868.82 and Paris's CAC-40 was up 0.5% at 3463.38.
Telecom Italia was the biggest gainer among the euro zone's blue-chip stocks, rising 6.0%. It said gross operating profit rose a bit more than expected last year as its Latin American units offset a declining domestic business. Shares in rival Deutsche Telekom rose 1.0% while France Telecom increased by 0.7%.
In London, the focus was on Lloyds Banking Group which was leading the declines on the FTSE 100 index. Shares in the U.K. bank, which is 41% owned by the state, fell 3.0% after it reported a full-year net loss of GBP2.8 billion. The bank was hit by impairment charges for mis-sold insurance and restructuring costs. In addition, the bank said 2014 return on equity targets will not be met and are deferred. "Surely this should not surprise?" said analysts at Investec.
Banks are of particular interest Friday as the Italian regulator is scheduled to lift the short-selling ban of Italian financial stocks, imposed in August 2011. The Italian regulator Consob has up to now expressed no desire to extend the ban.
In addition, Barclays Capital has downgraded the European banks sector Friday to underweight from market weight. With the second longer term refinancing operation imminent, the brokerage believes the news has already been priced in. The Stoxx Europe 600 banks index was up 0.6%.
On the economic front, Germany's economy contracted in the fourth quarter of 2011 by 0.2%, in line with expectations and unchanged from the first gross domestic product reading. Meanwhile, the French consumer confidence index rose slightly in February to 82 from 81 in January. "French consumer confidence seems to hold well despite the rise in unemployment," said Manuel Maleki, economist at ING Bank.
Earlier, Asian stock markets finished mostly higher. Japan's Nikkei Stock Average added and Australia's S&P/ASX 200 gained 0.5%. South Korea's Kospi Composite finished 0.6% higher, Hong Kong's Hang Seng Index finished up 0.2% and China's Shanghai Composite Index was up 1.2%.
Crude oil continued to gain after rising to a fresh nine-month high Thursday amid increasing concerns over Iran and despite a U.S. report that showed rising U.S. oil stockpiles and still slumping fuel demand. Traders worry that a standoff between Iran and the West ahead of the European Union's Iranian oil embargo could disrupt some of that country's 3.5 million barrels a day of production from hitting the market.
April Nymex crude oil futures were up $0.56 at $108.39 per barrel and Brent oil futures were up $0.26 at $123.88.
In foreign exchange markets, the euro was at $1.3394 against the dollar, from $1.3370 late Thursday in New York. The dollar was at Y80.60, from Y80.00.
Spot gold was at $1,780.20 per troy ounce, up $1.00 from its New York settlement on Thursday. The March bund contract was down 0.15 at 138.87.
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