European stocks steady as Greece scraps referendum

European stocks steadied on Friday after Athens scrapped its bailout referendum, and as investors eagerly awaited the outcome of a G20 summit dominated by the eurozone debt crisis. The leaders of world biggest economic powers are gathered in the French seaside resort of Cannes, hoping to prevent the sovereign debt crisis from plunging the world into a fresh recession. Asian indices advanced as Greek Prime Minister George Papandreou ditched his plans for a national vote on last week's eurozone rescue package, which had drawn condemnation and shocked world markets earlier this week. The fast-moving events in Europe are largely expected to overshadow publication of US non-farm payrolls data later on Friday, dealers said. London's FTSE 100 index of top companies added 0.25 percent to 5,559.10 points in midday deals, while in Paris the CAC 40 dipped 0.48 percent to 3,181.17 and Frankfurt's DAX 30 slid 0.72 percent to 6,089.45 points. Milan's FSTE Mib index lost 0.57 percent, while Madrid's Ibex added 0.27 percent in value. The European single currency climbed to $1.3839, up from $1.3808 late in New York on Thursday. "Markets have reacted very positively to news that Greek Prime Minister Papandreou has backed down from a referendum on the Eurozone bailout plan," said broker Owen Ireland at Valbury Capital. Greek Finance Minister Evangelos Venizelos said on Friday he had told his European partners that Greece had officially abandoned its plan that had enraged leaders Europe-wide. The announcement came ahead of a pivotal confidence vote in parliament, which could spark the collapse of the government and plunge Greece and the eurozone into further turmoil. "The G20 summit concludes in Cannes today but continues to be overshadowed by events in Athens, as leaders look at ways of boosting the funds of the IMF while reiterating an action plan for global growth," said CMC Markets analyst Michael Hewson. "The situation in Greece continues to act as a backdrop to markets though there does seem a greater semblance of calm ahead of tonight's key confidence vote in the Greek parliament, which Papandreou could well lose." As the G20 put the finishing touches to a closing summit statement designed to kickstart global growth and rebalance trade, senior European Union officials said Italy's economy would be put under IMF surveillance. Papandreou had sent markets into a tailspin earlier this week when he called a surprise referendum on the nation's latest 100-bilion-euro bailout that was clinched at a critical Brussels summit last week. Investor sentiment was also boosted on Friday by the latest batch of company results and Thursday's surprise rate cut from the European Central Bank. However, financial markets remain on edge over Italy. Italian 10-year government bond yields have risen to record high levels this week on fears that the crisis could engulf Rome. Frankfurt was dogged by news that the country's second-biggest lender, Commerzbank, has abandoned its profit target for next year after writedowns on its Greek bond holdings pushed it deeply into the red in the third quarter. In response, Commerzbank shares plunged 4.16 percent to 1.68 euros, topping the losers board on the Dax index. Investors also digested major pieces of takeover news. International Airlines Group, which comprises British Airways and Iberia, on Friday unveiled a deal in principle to buy Lufthansa's British Midland division, but also posted a 26-percent drop in third-quarter net profits. And London-listed mining giant Anglo American agreed to buy 40 percent of De Beers from South Africa's Oppenheimer family for $5.1 billion (3.7 billion euros), tightening its grip on the world's biggest diamond firm. Separately, Britain's state-rescued Royal Bank of Scotland announced that it had rebounded into profit during the third quarter, when falling bad debts offset plunging income at its investment division. The group's share price rose 3.95 percent at 23.7 pence in reaction to the results.