WEEKLY UPDATE – Swedish banking shares dropped sharply on Friday over tough words by US President.

Stock markets across the globe dropped Friday after US President Barack Obama unveiled plans to limit the size and scope of US banks and financial firms in a move to curb "excessive" risk taking.

"Never again will the American taxpayer be held hostage by a bank that is too big to fail," vowed Barack Obama, although being heavily criticized by Sweden’s Finance Minister Anders Borg.

Swedish banks -- SEB, Swedbank, Nordea and Handelsbanken -- fell heavily – in line with other European banks. Swedbank was down almost 3 percent while Handelsbanken fell 1.50 percent.

Still, stocks at the Stockholm exchange declines less than the main European markets as the report season kicked off in a positive beat with uplifting signals from Ericsson’s joint venture Sony Ericsson and the Wallenberg family's powerful holding firm Investor AB.

The OMX Stockholm 30 index declined 0.30 percent Friday and was down 2.45 percent compared to a week ago.

Ericsson gained 1.5 percent after Sony Ericsson surprised by posting lower-than-expected losses due to better margins helped by sales of new high-margin phones as well as cost cuts. Although sales dropped 40 percent compared to last year gross marking swelled from 15 percent to 23 percent.

Construction firm Skanska rose 1.5 percent Friday after being awarded two contracts in the U.S. amounting to approximately 710 million dollar.

Swedish Match fell Tuesday after Norway’s sovereign wealth fund kicked out 17 tobacco producers -- including Swedish Match -- from its 450 billion dollar portfolio for ethical reasons.

Thursday Investor AB, the publicly traded industrial holding firm controlled by the influential Wallenberg family, announced a swing back to profit as it posted net profits of 31.4 billion kronor ($4.4 billion) for last year after a 36.7-billion-kronor net loss 2008.

“Most economic measures now indicate that we are - and have been for a few months - in a global recovery”, Chief executive Börje Ekholm said in the report, adding that "the venture capital market looks promising for 201o".

The company's performance is considered a reliable indicator of the state of the Swedish economy as it has stakes in nearly all of Sweden's major companies, such as Ericsson, ABB and the bank SEB.

Mounting worries over China's economy and huge national debts in Europe added to the week's hurly-burly on global stock markets.