LONDON—Banking shares dragged European markets lower, as uncertainty over Greece intensified after euro-zone finance ministers held off on approving Greece's second bailout.
The Stoxx Europe 600 index shed 0.9% to end the week at 261.24. The benchmark dropped 1.3% over the week, its steepest weekly decline in two months. U.S. stocks also were weaker, hurt by an unexpected drop in a consumer-sentiment gauge.
Euro-zone finance ministers demanded late Thursday that the Greek parliament ratify austerity measures before they approve another aid tranche needed to prevent a default in March. Among other demands, the finance ministers want political leaders of the coalition to provide details of €325 million in additional cuts.
"They don't trust Greece. Agreeing is one thing, but implementing is another and they want assurance that Greece will live up to the agreement," said said Mike Lenhoff, chief strategist at Brewin Dolphin. "If the parliament refuses to approve the measures, Greece will have to leave the euro zone, because they'll default."
Sentiment took another hit in afternoon trading after a leader of a junior partner in Greece's coalition government said his party will vote against new austerity measures, expected to reach parliament by Sunday.
The Athens General Index sank 3.2% to 797.35; National Bank of Greece tumbled 9.5%.
Among other lenders, Société Générale sank 7.5%, BNP Paribas slid 4.1% and Crédit Agricole dropped 4.8%, all in Paris. Commerzbank and Deutsche Bank dropped 5.2% and 4%, respectively, in Frankfurt. Lloyds Banking Group fell 2.8% in London.
Barclays rose 0.4% after reporting a drop in 2011 net profit while also citing an improvement in market conditions in the beginning of 2012.
Germany's DAX 30 index fell 1.4% to 6692.96 a day after closing at its highest level since Aug. 2. The benchmark ended in the red for the week, snapping a string of seven weekly gains.
The French CAC 40 index declined 1.5% to 3373.14, and the U.K. FTSE 100 index shed 0.7% to 5852.39.
Total lost 1.4% as oil prices declined. The company reported a rise in fourth-quarter net income as oil prices rose, and reiterated its output view.
GDF Suez dropped 3.7% a day after reporting a 13% drop in 2011 results.
Miners fell along with metal prices. Kazakhmys declined 4.5%, and Anglo American lost 4%.
Cable & Wireless Communications sank 16% after a disappointing trading update. The British firm cited problems in its Panama business and cut its full-year earnings forecast for the country.
SSAB tumbled 6.9%. The Swedish steel maker reported a larger-than-expected loss for the fourth quarter and said demand in Europe remains weak.
Alcatel-Lucent surged 12%. The French telecoms-equipment maker said it swung to a net profit for 2011.
Lock maker Assa Abloy climbed 5.6% as it reported strong sales in fourth quarter and said it was optimistic about the U.S. construction market and pricing in the future.
In the currency markets, the euro was at $1.3189, down from $1.3286 late Thursday in New York.
Write to Sara Sjolin at sara.sjolin@dowjones.com
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