LONDON (MarketWatch)�European stock markets ended with a small gain on Thursday after trading in negative territory for most of the day, trimming a weekly loss tied in part to renewed sovereign-debt worries.
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The Stoxx Europe 600 index XX:SXXP �rose 0.1% to close at 259.07 after trading as low as 256.52. For the week, the index fell 1.6%.
European equities pushed back into positive territory in late trade as Wall Street erased initial losses. Most European and U.S. markets are closed Friday. Major European markets will also be closed Monday for the Easter Monday holiday.
European stocks slumped Wednesday after a lackluster Spanish government-debt auction reignited fears over the euro zone�s sovereign-debt crisis, while Italian and Spanish government bond yields spiked. Yields rise as bond prices fall.
�The bond auction yesterday failed to generate lower yields and obviously markets are suspicious. The spread to the German bund is now over 400 basis points, which is the highest since December. This means that investors are shunning...Spanish bonds,� said Marc Pussard, head of trading at Tradenext.
/quotes/zigman/2759620 IBEX 6,876.30, +102.80, +1.52% /quotes/zigman/1482176 FTSEMIB 13,662.80, -88.83, -0.65%
Yields were also higher Thursday and the yield on the 10-year Italian government bond IT:10YR_ITA �surged 12 basis points to 5.43%. The FTSE MIB index XX:FTSEMIB � slipped 0.2% to 15,216. Banco Popolare SC IT:BP �lost 2.5%, while Banca Monte dei Paschi di Siena SpA IT:BMPS �fell 5%.
In Spain, the yield on the 10-year government bond ES:10YR_ESP �rose 8 basis points to 5.74% and traded at the highest level since the European Central Bank�s first, three-year long-term refinancing operation, or LTRO, in December. Spanish yields rise to pre-LTRO level.
The IBEX 35 index XX:IBEX �erased an earlier loss to finish virtually unchanged at 7,660.50, while CaixaBank SA ES:CABK �shed 1.6%. The IBEX fell 4.3% over the course of the week and is down 10.6% since the beginning of 2012, missing out on a rally that has lifted other indexes in the region.
�There are no positive signs for Spain. The indexes have only taken one direction since the middle of March and the drop in the IBEX reflects growing market pessimism. Unemployment is rising and there are structural supply-side issues that need be addressed,� Tradenext�s Pussard said.
�I think that there will be help to come from the EU. The bond market is pricing in a risk of a Spanish default, but Spain is too big to fail.�
Pussard said that he would be short in European equities at the moment, but long in U.S. stocks.
In the U.S., initial jobless claims fell by 6,000 to 357,000 last week, exceeding analyst expectations. U.S. jobless claims
Banks were on the decline across the Continent. In the U.K., banks were sent lower after data from the U.K. Office for National Statistics said manufacturing production fell by 1% in February, slipping below analyst expectations of a 0.1% increase.
Meanwhile, the Bank of England left its key lending rate unchanged at 0.5%, as expected, and made no adjustments to its bond-buying program. Bank of England stands pat on interest rates
Lloyds Banking Group PLC UK:LLOY �LYG �fell 1.6%, Royal Bank of Scotland Group PLC UK:RBS �RBS �gave up 1.1% and heavyweight HSBC Holdings PLC UK:HSBA �HBC �traded 0.4% lower. The FTSE 100 index UK:UKX �gained 0.3% to close at 5,723.67. FTSE 100 gains.
Gains were led by investment firm Ashmore Group PLC UK:ASHM �, which jumped 5.2% after UBS raised the stock to buy from neutral and said it sees significant opportunities for growth.
Outside the main index, National Express Group PLC UK:NEX �added 0.7% after Morgan Stanley upgraded the stock to overweight from equal weight.
The French CAC 40 index FR:PX1 �posted a 0.2% rise to 3,319.81.
Credit Agricole SA FR:ACA �slipped 2%, while Veolia Environnement SA FR:VIE lost 2.7% after Deutsche Bank cut the stock to sell from hold.
/quotes/zigman/433475 ASHM 339.80, -6.80, -1.96%
The German DAX 30 index DX:DAX slipped 0.1% to close at 6,775.26, as banks came under pressure. Commerzbank AG DE:CBK �gave up 1.9%, although Deutsche Bank AG DE:DBK shrugged off earlier losses to eke out a 0.1% gain.
Industrial production for February showed a disappointing 1.3% drop, below analyst expectations of a 0.6% decline. �
Also adding pressure on the index, drug maker Merck KGaA DE:MRK �slipped 1.8% as Exane BNP Paribas cut the stock to neutral from outperform.
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