* Credit markets show signs of stability
* Analysts sceptical over EU bank "stress tests"
* High-yield company Remy Cointreau unveils buy-back
LONDON, June 18 (Reuters) - European corporate credit default swap spreads held steady on Friday, but still lagged a rally in European equities that reflected a more positive mood generally among these investors.
By 1003 GMT, the investment-grade Markit iTraxx Europe index was at 120 basis points, according to data from Markit. That is unchanged from late on Thursday, according to data from BGC Partners.
The Markit iTraxx Crossover index, made up of 50 mostly "junk"-rated credits, was at 539 basis points, 1 basis point tighter.
Sovereign CDS spreads were also edging tighter, with the Markit iTraxx SovX Western Europe index about 5.5 basis points tighter at 136.5 basis points, according to Markit.
Credit markets have tended to lag an advance in European equities this week because of their fixation with the sovereign debt crisis in Europe.
"The inconsistency between credit and equity markets can only be explained by the discrepancy in confidence levels being expressed by the markets," BNP Paribas credit strategists said in a note to investors.
The credit markets are focusing on the European Union's plans to publish in July details of "stress tests" showing the financial health of major banks.
"Greater transparency on the big names will be provided but we won't be any the wiser on smaller names such as the savings banks and the Landesbanks in Germany," credit analysts at Royal Bank of Scotland said in a note.
"Level of detail to be disclosed still needs to be decided on and what exactly the tests were testing is not really clear yet other than to assess the impact on banks in the "most adverse scenarios," they said.
Five-year CDS on oil company BP were at about 450 basis points, around 18 basis points wider than Markit's official close on Thursday of 432 basis points.
The company's CDS had widened out to about 460 basis points in late trading on Thursday after Markit's official close. This followed reports that BP is seeking to raise debt financing as it continues to fight the Gulf of Mexico oil spill.
BP's CDS have had a volatile week, closing on Monday at about 424 basis points and then widening further to 614 basis points at the close on Wednesday, according to Markit.
The first evidence of a reopening of the European high-yield bond market emerged in the primary market, with French spirits maker Remy Cointreau announcing plans to issue about 200 million euros ($247.6 million) of bonds as part of a bond buyback.
More high-yield companies are expected to follow in its wake. (Reporting by Jane Merriman; Editing by Jon Loades-Carter)