diff --git a/java/java-impl/src/com/intellij/codeInsight/daemon/impl/analysis/HighlightClassUtil.java b/java/java-impl/src/com/intellij/codeInsight/daemon/impl/analysis/HighlightClassUtil.java
index 4548378a49d0..170dbec1e133 100644
--- a/java/java-impl/src/com/intellij/codeInsight/daemon/impl/analysis/HighlightClassUtil.java
+++ b/java/java-impl/src/com/intellij/codeInsight/daemon/impl/analysis/HighlightClassUtil.java
@@ -349,7 +349,7 @@ public class HighlightClassUtil {
       return null;
     }
     PsiClass aClass = (PsiClass)keyword.getParent();
-    if (PsiUtilCore.hasErrorElementChild(aClass)) return null;
+    if (PsiUtilCore.hasErrorElementChild(aClass) || (aClass.getQualifiedName() == null && !aClass.isInterface())) return null;
     // highlight 'static' keyword if any, or class or interface if not
     PsiElement context = null;
     PsiModifierList modifierList = aClass.getModifierList();
diff --git a/java/java-impl/src/com/intellij/codeInsight/daemon/impl/analysis/HighlightUtil.java b/java/java-impl/src/com/intellij/codeInsight/daemon/impl/analysis/HighlightUtil.java
index 99483109d7c4..b18dac26941c 100644
--- a/java/java-impl/src/com/intellij/codeInsight/daemon/impl/analysis/HighlightUtil.java
+++ b/java/java-impl/src/com/intellij/codeInsight/daemon/impl/analysis/HighlightUtil.java
@@ -824,7 +824,7 @@ public class HighlightUtil {
         }
         else if (PsiModifier.STATIC.equals(modifier) || PsiModifier.PRIVATE.equals(modifier) || PsiModifier.PROTECTED.equals(modifier) ||
                  PsiModifier.PACKAGE_LOCAL.equals(modifier)) {
-          isAllowed = modifierOwnerParent instanceof PsiClass;
+          isAllowed = modifierOwnerParent instanceof PsiClass && ((PsiClass)modifierOwnerParent).getQualifiedName() != null;
         }
 
         if (aClass.isEnum()) {
diff --git a/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/advHighlighting/ModifierAllowed.java b/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/advHighlighting/ModifierAllowed.java
index 99b79745b48e..d9012650d71f 100644
--- a/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/advHighlighting/ModifierAllowed.java
+++ b/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/advHighlighting/ModifierAllowed.java
@@ -66,3 +66,11 @@ interface i3 {
   <error descr="Modifier 'transient' not allowed here">transient</error> int m2() { return 0; }
   <error descr="Modifier 'synchronized' not allowed here">synchronized</error>  int m3() { return 0; }
 }
+
+class LocalClassWithInner {
+    void foo () {
+          class A {
+             <error descr="Modifier 'private' not allowed here">private</error> class B {}
+        }
+    }
+}
diff --git a/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/advHighlighting/StaticInInner.java b/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/advHighlighting/StaticInInner.java
index 14dc7c34bc6f..a8c82f35d016 100644
--- a/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/advHighlighting/StaticInInner.java
+++ b/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/advHighlighting/StaticInInner.java
@@ -48,7 +48,7 @@ public class a {
     <error descr="Inner classes cannot have static declarations">static</error> 
       final int f2 = x instanceof Integer ? 1 : 0;
 
-    <error descr="Inner classes cannot have static declarations">static</error> 
+    <error descr="Modifier 'static' not allowed here">static</error> 
       class a_ic_c2 {}
 
     <error descr="Inner classes cannot have static declarations">static</error> 
@@ -75,7 +75,7 @@ public class a {
     <error descr="Inner classes cannot have static declarations">static</error> 
       final int f2 = x instanceof Integer ? 1 : 0;
 
-    <error descr="Inner classes cannot have static declarations">static</error> 
+    <error descr="Modifier 'static' not allowed here">static</error> 
       class a_ic_c2 {}
 
     <error descr="Inner classes cannot have static declarations">static</error> 
diff --git a/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/genericsHighlighting/Enum.java b/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/genericsHighlighting/Enum.java
index d724dc5e0efa..e113157c5841 100644
--- a/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/genericsHighlighting/Enum.java
+++ b/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/genericsHighlighting/Enum.java
@@ -115,7 +115,7 @@ class X extends <error descr="Classes cannot directly extend 'java.lang.Enum'">E
 
 enum StaticInEnumConstantInitializer {
     AN {
-        <error descr="Inner classes cannot have static declarations">static</error> class s {
+        <error descr="Modifier 'static' not allowed here">static</error> class s {
         }
         private <error descr="Inner classes cannot have static declarations">static</error> final String t = String.valueOf(1);
     };