By Carla Mozee, MarketWatch

LONDON (MarketWatch) -- Austria's benchmark equity index slid by the most in four months on Friday, hit hard after market heavyweight Erste Group Bank AG warned of a hefty annual loss.

Erste Group Bank tumbled 16% to 19.48 euros ($26.49) after it said it expects to post a net loss of EUR1.4 billion to EUR1.6 billion for 2014 as a result of higher provisions for its units in Hungary and Romania. Annual risk costs will be pushed up to EUR2.4 billion from the previously expected EUR1.7 billion, said Erste.

In Hungary, the government is aiming to cut charges by banks on foreign currency mortgages to aid homeowners struggling in the wake of a weakening in the Hungarian forint. Meanwhile, the Romanian National Bank is working to reduce nonperforming loans before an asset-quality review by the European Central Bank.

Barclays cut its rating on Erste to underweight from equalweight. With Erste the most heavily weighed on Austria's ATX, the stock index was pulled down by 3% to 2,460.31.

Erste was also the biggest decliner on the Stoxx Europe 600 index , which shed 0.3% at 347.95. The index had finished the past three sessions with gains.

Trading volume was lower than usual in Europe on Friday as Wall Street closed for the July 4th holiday. The S&P 500 index (SPX) and the Dow Jones Industrial Average (DJI) ended Thursday at record highs, with the Dow industrials closing above the 17,000 level in the wake of a stronger-than-expected U.S. June jobs reports.

In Paris on Friday, the CAC 40 equity index fell 0.5% to 4,468.98, and Germany's DAX 30 gave up 0.2% to 10,009.08.

But seeing gains Friday were shares of EasyJet PLC , higher by 1% after the British budget airline said the number of passengers it carried in June rose 10.1% to 6.1 million, compared with the year-ago period.

EasyJet nearly topped advancers on the U.K.'s FTSE 100 . The index overall edged up less than 1 point to close at 6,866.05.

Meanwhile, British government-services provider Serco Group PLC said Friday it lost a rebid to operate the Docklands Light Railway in London. Its shares declined 0.3%. Serco will continue to service the line through Dec. 7. The DLR franchise generated revenue of about 90 million pounds ($ 154.3 million), or 2% of Serco's overall revenue, at a margin that was well below the average Serco logs on its contracts, it said.

Elsewhere in Europe, shares of Let's Gowex SA remained suspended for a second day in Madrid. The shares tumbled more than 70% on Tuesday and Wednesday combined after short seller Gotham City Research LLC said it believes that more than 90% of revenue reported by the free public Wi-Fi provider "does not exist." Gotham City "does not trust Gowex's reported revenues, and believes Gowex is too good to be true," it said, adding that it estimates actual revenue to be less than EUR10 million.

Gotham City's claims are "unfounded and defamatory," Gowex said in a Thursday statement, and said it's preparing a report of relevant facts to clarify the company's position.

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