LONDON, March 22 (Reuters) - European shares ended marginally lower on Friday as investors remained relatively sanguine that a deal would be struck to bail out deeply-indebted Cyprus, save its banking system and prevent an escalation of the euro zone debt crisis.
The FTSEurofirst 300 provisionally closed down 0.57 of a point, or 0.1 percent at 1,190.15, while the euro zone blue chip index was flat at 2,684.11, although all major European indexes ended the week in negative territory.
"It has been a bumpy week but indices are still absorbing bad news relatively easily," Dominic Hawker, analyst at Messels, said.
An announcement late on Friday by the deputy leader of Cyprus's ruling Democratic Rally party that a solution to the island's bailout crisis within the framework set down by the European Union may be possible within "the next few hours", helped stabilise indexes.
Bank of America Merrill Lynch remained optimistic a deal for Cyprus would be reached and expected the Euro STOXX 50 to rebound back towards 2,750 points once a deal is reached, but scepticism remained among some investors.
"The cynic in me says the market is building itself up for disappointment, as any potential deal would then have to be approved by troika," a London-based trader said.
Cyprus needs to find 5.8 billion euros ($7.50 billion) in new money by a Monday deadline to clinch a European Union bailout, having earlier rejected a plan to raise the funds by taxing bank customers' deposits. If it cannot do so, it risks a collapse of its financial system that could push it out of the euro zone.