European stocks close

European stocks posted their biggest weekly decline this year as a report showed the U.S. economy unexpectedly shrank in the fourth quarter and Spain’s markets regulator lifted a ban on shorting equities.

The benchmark Stoxx 600 fell 0.5 percent to 288.2 this week, its biggest drop since the end of 2012.

Spanish banks slumped, with Banco de Sabadell SA plunging 14 percent and Bankia tumbling 25 percent, as the country’s stock-market regulator, known as CNMV, said on Jan. 31 that it wouldn’t extend a ban on shorting stocks.

Santander lost 7.7 percent after the country’s largest lender set aside money for further loan losses in its home market. The bank reported fourth-quarter profit of 401 million euros ($549 million), missing the average analyst estimate of 801.6 million euros.

National benchmark indexes retreated in 12 of western Europe’s 18 markets this week.

FTSE 100 6,347.24 +70.36 +1.12% CAC 40 3,773.53 +40.93 +1.10% DAX 7,833.39 +57.34 +0.74%

Saipem (SPM) plunged 36 percent. Europe’s largest oil-services company by sales lowered its forecast for earnings before interest and taxes in 2012 to about 1.5 billion euros. Ebit will fall to about 750 million euros in 2013, the company said. It predicted that earnings from onshore projects would slump by about 80 percent this year.

Imagination Technologies rallied 18 percent. Morgan Stanley upgraded the British maker of chip technology for phones and tablet computers to overweight, the equivalent of buy, from equal weight.

Swedbank AB (SWEDA) jumped 12 percent as the second-best capitalized major lender in the European Union proposed a dividend of 9.90 kronor a share, compared with 5.30 kronor a year earlier. The lender posted net income of 4.34 billion kronor ($690 million) in the fourth quarter, beating the 3.54 billion-krona average analyst estimate.