GLOBAL MARKETS: European Stocks Slightly Higher; Banks In Focus

--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 FTSE 100


LONDON (Dow Jones)--European stocks posted mild gains Friday with positive earnings from Telecom Italia proving a welcome surprise, but Lloyds Banking Group shares slid after it posted less 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.

Nevertheless, market participants are keeping one eye on Greece. "Greece isn't quite out of the woods yet on its March redemptions, with questions remaining over the International Monetary Fund's contribution to the second bailout and with this contribution now tied into Germany's vote to ratify the second bailout next week," said Lee McDarby, head of dealing for the Corporate & Institutional Treasury desk at Investec Bank.

At 1035 GMT, the benchmark Stoxx Europe 600 index was 0.3% higher at 264.92, Frankfurt's DAX was up 0.8% at 6864.64 and Paris's CAC-40 was up 0.5% at 3464.78. Meanwhile, London's FTSE 100 was flat at 5938.94, underperforming its peers and barely changed after the second release of fourth-quarter gross domestic product data showed an unrevised 0.2% contraction.

At the same time, U.S. stock-index futures pointed to a slightly firmer open on Wall Street, with the DJIA front month futures contract up 0.2% at 13,001.00 and the S&P 500 front month futures contract up 0.3% at 1366.70.

Telecom Italia was one of the biggest gainers among the euro zone's blue-chip stocks, rising 5.9%. According to analysts, its full-year 2011 results were slightly above market expectations and in line with the company's guidance. Well-received sales and earnings before interest, taxes, depreciations and amortization were driven by business in both Brazil and Italy. Shares in rival Deutsche Telekom rose 1.2% while France Telecom increased by 0.9%.

In London, the focus was on Lloyds Banking Group, which was down 1.2% after reporting 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 1.2%.

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 0.1% and China's Shanghai Composite Index was up 1.3%.

Crude oil came off a little, 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 unchanged at $108.21 per barrel, while April Brent oil futures were also unchanged at $123.62.

In foreign exchange markets, the euro was at $1.3391 against the dollar, from $1.3370 late Thursday in New York. The dollar was at Y80.57, from Y80.00.

Spot gold was barely changed from its New York settlement on Thursday, at $1,779.20 per troy ounce.

The March bund contract was down eight ticks at 138.94.