WEEKLY UPDATE – Stocks in Stockholm declined ahead of the Midsummer holiday as the US Federal Reserve raised concerns about the strength of the economy's recovery from recession.

The OMX Stockholm 30 index closed down 2.50 percent Thursday, the last trading day of the week. Compared to last week the index was down 2.32 percent.

The Swedish economy is on the road to recovery and poised to become the strongest in the Western world over the coming years, the National Institute of Economic Research said in a report Wednesday.

Still, a threat to recovery is posed by problems with government finances in other countries.

"European bourses slid as concerns over the strength and sustainability of any global recovery returned," Giles Watts, head of equities at trading firm City Index, told AFP. "Sentiment remains cautionary after the Fed damped its prospects for speed of the global recovery, citing amongst other issues the plight of European debt worries and the ongoing impact this is having on the markets."

The Swedish publisher of free newspapers, Metro International, said Thursday it had sold its Greek division because of the economic crisis in the country, which sank the paper's ad revenue. Shares were down 2.59 percent.

Shares in Swedish cheap'n'chic fashion group Hennes & Mauritz declined 3 percent Thursday after posting net profit of 5.2 billion kronor, in line with expectations. But weak May sales made the market disapointed. H&M; plan to open 180 new stores during the second half of the year.

The previous day shares in three other fashion companies, Kappahl, MQ and RND, declined.
“There was a strong start to the quarter but in the latter half sales were considerably weaker than expected. This was affected by a cold spring and weak consumption”, Kappahl’s chief executive officer Christian W. Jansson said.

Swedish biotech company Diamyd Medical rallied 28 percent Wednesday after announcing that it has signed a potential 625-million-dollar deal with Ortho-McNeil-Janssen Pharmaceuticals, a subsidiary of Johnson & Johnson, to develop and commercialize the Diamyd diabetes therapy.

On Monday stocks gained and the Swedish kronor rose to the strongest in 21 months against the euro after China signaled an end to the yuan’s peg to the U.S. dollar.
“The Chinese announcement was a relief for investors,” Carl Hammer, a currency strategist at SEB, told Bloomberg. “The Scandinavian currencies are being bundled with the Australian and Canadian dollars as those which will benefit the most from the China move.”

Volvo Group, the world’s second biggest truck maker, gained 2.74 percent Monday after a its second largest owner, Industrivärlden, said it was interested in buying Renault's stocks. Also Scania rose Monday.

Swedish miner and smelter Boliden rose 3.61 percent Monday after it signed a 6.1 billion kronor ($789 million) credit line, that will be used to refinance debts.

Since the turn of the year the OMX Stockholm 30 index is up 7.33 percent.

This article has been published at The Swedish Wire and Nasdaq OMX Nordic.