LONDON (ShareCast) - - Markets down in wake of Moody’s downgrade warnings.
- Italy completes successful debt auction.
- German investor confidence comes in better than expected.

FTSE-100: -0.1%
Euro Stoxx 50: -0.09%
Dax-30: -0.14%
Cac-40: -0.27%
Ibex 35: -0.19%
Mibtel:+0.47%

Most equity markets across Europe fell on Tuesday following the downgrades last night of Italy, Malta, Portugal, Spain, Slovakia and Slovenia by the ratings agency Moody’s.

Perhaps more worryingly for investors, both France and the UK were warned they too face downgrades if they fail to entrench spending discipline.

Today’s falls however come in the context of a significant rally yesterday across the continent and a general perception that the Eurozone debt crisis may be alleviating.

News from Germany emphasised this, with the ZEW Centre for European Economic Research, a Mannheim-based think tank, releasing a better than expected reading for its index of investor and analyst expectations. The measure jumped from minus 21.6 in January to a positive reading of 5.4 in February.

Italy completed a successful auction of €6bn in bonds achieving interest rates significantly better than in recent months. The country, which has been the focus of intense concern over its debt levels, appears to be a beneficiary of the European Central Bank making nearly €500bn available through its three year “long term refinancing operation”.

Less pleasing for investors was a report from Reuters that Spain, another under-pressure country, may have overstated its 2011 budget deficit so as to make this year’s look better.

EQUITIES

The German stock-exchange operator Deutsche Börse jumped 0.8% after reporting a 4.4% increase in fourth quarter revenues. The company has also announced its intention to pay its shareholders a special dividend.

Thyssen Krupp, Germany’s largest steel maker, fell 3.7% by the close after posting a first quarter loss on the back of project delays.

French cosmetics maker L´Oreal gained 4% after saying it was confident it would increase revenues and profits through 2012.

The weakest sector on the Stoxx Europe 600 was basic resources which fell 1.74%. The biggest gains were posted by personal and household goods stocks, with the sector rising 0.62% by the close.

MACROECONOMY

Eurozone industrial production for the month of December contracted at a month-on-month rate of 1.1% (Consensus: -1.2%).

French non-farm employment payrolls grew by 0.2% quarter-on-quarter in the last three months of 2011.

OTHER MARKETS

Front month Brent crude futures had fallen back by 0.14% by 4.31pm in London to $117.77 per barrel.

The euro/dollar had fallen 0.33% by 5.43pm in Frankfurt to $1.3143.

BS

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