European shares pulled back on Friday with UBS dragging bank stocks lower after posting a drop in full-year profit, while Britain's biggest supermarket Tesco surged after a 3.7 billion-pound takeover of a supplier.
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The pan-European STOXX 600 index was down 0.5 percent while UK's FTSE was flat, supported by Tesco , which rose 8.4 percent after agreeing to buy wholesale supplier Booker in a deal that cements its dominant position in the UK.
Booker shares hit a record high and were the top STOXX gainer, up more than 15 percent.
"At first glance Tesco's merger with Booker makes perfect sense. Tie up the end-to-end wholesale/retail business and make savings in the process," said ETX Capital analyst Neil Wilson.
Investors also cheered to news that the UK supermarket expects to restart paying dividends again.
UBS fell 3.4 percent. The world's biggest wealth manager posted a 47 percent fall in 2016 net profit but struck a more optimistic tone for 2017 as its fourth-quarter net profit came in well ahead market expectations.
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Baader Helvea analyst Tomasz Grzelak said UBS delivered a solid update thanks to very a strong investment banking results but outflows at its wealth management operations disappointed.
"Considering that the ... negatives are to be seen as phasing out in 2017, the results support our buy rating," he added.
Losses in UBS helped drag Europe's bank index down 1.4 percent, making it the biggest sectoral faller in Europe.
Elsewhere in the sector, UniCredit fell 4.4 percent after a report said the Italian lender may start its multi-billion-euro capital hike on Feb. 6.
In spite of Friday's weakness, the STOXX 600 remains close to its highest in more than one year and set to end the week with a gain of around 1 percent. The surge reflects support from merger and acquisition activity, optimism over U.S. President Donald Trump's growth-boosting policies and a good start to the earning season.
According to JP Morgan, 59 percent of the STOXX companies that have reported so far beat earning per share estimates , with growth running at 11 percent year-on-year, while more than two thirds beat revenues forecasts.
There were more good earning updates on Friday.
Shares in LVMH rose 1 percent to approach record highs after the world's biggest luxury group posted a forecast-beating rise in 2016 results, while Finnish ship engine and power plant maker Wartsila climbed 7 percent, also buoyed by stronger than expected results.
Among outstanding losers was online lottery firm Zeal Network. Its shares tumbled 22 percent with traders citing disappointed over its dividend plans and a below-consensus guidance.
(Reporting by Danilo Masoni)