* FTSEurofirst 300 up 0.4 pct
* Portugal's top index rallies 2 percent after Thursday's
* Issues at BES not seen affecting other banks
* FTSEurofirst set for worst weekly fall since April
By Alistair Smout
EDINBURGH, July 11 European shares rose on
Friday, led up by a relief rally in Portuguese banks, with
investors reassured that concerns over the country's biggest
listed bank was unlikely to engulf other firms in the sector.
Portugal's PSI share index was up 2 percent in
early deals, after falling 4.2 percent to a nine-month low on
Thursday, with other indexes firming up across the region.
The fall in the previous session came after shares and bonds
of Espirito Santo Financial Group, the chief
shareholder in Banco Espirito Santo, were suspended
over "material difficulties" at parent firm ESI.
On Thursday Banco Espirito Santo said losses associated with
the founding family would not affect the bank.
Lenders Banco BPI and Banif were up
nearly 6 percent, even as both Banco Espirito Santo and Espirito
Santo Financial Group failed to open on Friday.
"While the bank has some exposure to the holding company,
over a billion euros, it's very clear that they have enough
excess capital, over 2 billion euros," Veronika Pechlaner, who
helps manage $13 billion of assets at Ashburton Investments,
"So the systemic risk to the Portuguese banking system is
limited, and that's what the market is telling you this
The FTSEurofirst 300 was up 0.4 percent to 1,354.80
at 0954 GMT, although the index was still set for its worst
weekly performance since April, down 2.9 percent.
Concerns over Banco Espirito Santo, as well as an enquiry by
the United States over whether German lender Commerzbank
broke sanctions restrictions, have hit the banking
sector especially hard this week.
A 1.8 percent rally in euro zone banks saw the
sector down only 4 percent for the week, having been down as
much as 7.3 percent for the week on Thursday, at its lowest
level this year.
The Austrian banking sector has also been in focus in recent
weeks due to its exposure to eastern Europe. Erste
rebounded from recent falls to rise 4.5 percent, however,
benefitting from an upgrade from UBS.
Analysts at UBS said that the recent fall, down nearly 20
percent since last week, "more than reflects the expected losses
in problematic geographies," upgrading the stock to "buy" from
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today's European research round-up
(Editing by Toby Chopra)