(Re-writes, updates prices, adds further information, comment.) LONDON (Dow Jones)--Spreads on European corporate credit default swap indexes were slightly tighter Friday, and traded in a narrow range as U.S. earnings announcements held the credit market's attention but failed to move spreads significantly. At 1245 GMT, the Markit iTraxx Crossover index, which measures the cost of insuring the debt of 50 mostly sub-investment grade European corporate borrowers, was two basis points tighter from Thursday's close at 525/529 basis points--roughly unchanged from where it had been quoted at 0630 GMT. The Europe index of 125 investment grade borrowers was 0.5 basis points tighter from Thursday's close, at 115.75/116.75 basis points, also close to its early level. "Volumes are OK, but trading is all around the same levels," said a broker. "In the absence of major negative news, we're grinding tighter." At one point Friday, the Crossover index had been quoted at 522/526 basis points, as financial markets took heart from the 16% rise in second quarter earnings at General Electric Co (GE) and the stronger performance at its GE Capital financial unit. But those gains were given up as Bank of America Corp. (BAC) and Citigroup (C) reported disappointing revenues, and U.S. stock futures dropped into the red. "With U.S. earnings season getting busier over the next few weeks and some key U.S. housing data next week we have a crucial period coming up that will tell us more about the shape of the U.S. economy," Jim Reid, credit strategist at Deutsche Bank AG, said in a note. Away from earnings, credit markets were also eyeing BP PLC (BP.LN) and Goldman Sachs Group Inc. (GS). BP's five-year CDS spreads tightened around 20 basis points to 330 basis points, according to one trader, as the company said that no oil is flowing out of its broken well in the Gulf of Mexico as it tests its new cap. Goldman Sachs, meanwhile, has agreed to pay $550 million to settle allegations of fraud brought by the U.S. Securities and Exchange Commission relating to the sale of mortgage-related securities. Reports of the settlement had helped U.S. stocks pare some of their early losses Thursday. A trader reported strong demand for European bank bonds Friday morning, although he said that this was due to the better tone in peripheral euro-zone sovereign bond markets, where spreads between Greek, Irish, Italian, Spanish, and Portuguese 10-year bonds and the benchmark German bund all narrowed Friday, as well as the Goldman settlement. Spain sold EUR3 billion of 15-year bonds at a successful auction Thursday, easing fears around its ability to borrow in the capital markets. "Spain has now completed its July issuance program so the negative EU sovereign newsflow should die down for a while," Deutsche Bank's Reid said. "Data and earnings will thus dictate sentiment." CDS are derivatives that function like a default insurance contract for debt. If a borrower defaults, the protection buyer is paid compensation by the protection seller. -By Mark Brown, Dow Jones Newswires; + 44 (0)207 842 9485; mark.brown@dowjones.com (Steve Goldstein in New York contributed to this item.) (END) Dow Jones Newswires July 16, 2010 08:52 ET (12:52 GMT)