Moody's downgrading puts the pressure on.
A week of uncertainty and lacklustre responses to central bank and G20 efforts sees European benchmark indices set to end the week in the red today, as a move by Moody's rating agency to downgrade 15 of the world's top banks, although expected, still puts on the pressure.
The German DAX and Dutch AEX lead the way, down around 1.1% and 0.9% at the time of writing. The Spanish IBEX is the one noticeable exception, however, up around 0.5%, boosted by the banking sector after the publication of 'stress test' results is taken as credible proof by the market that the €100bn allocated by the EU for the country's banks will be more than adequate to help recapitalise the sector.
Credit Suisse (NYSE: CS.US) was the only bank to receive a three-notch downgrade by Moody's, while UBS (NYSE: UBS.US), BNP Paribas (OTC: BNPQY.US), Crédit Agricole (OTC: CRARY.US) and Deutsche Bank (NYSE: DB.US) were all taken down two notches. Credit Suisse and Deutsche Bank currently lead losses in the sector, down almost 2% each. Meanwhile, Swiss banks Credit Suisse and UBS have already come out saying the downgrades will have no material effect on their liquidity or funding
Slightly weaker than expected German IFO Business Confidence data this morning added to days of disappointing numbers for the eurozone's leading economy, and industrial stocks are now the main underperformers on the DAX, with HeidelbergCement (OTC: HDELY.US) down around 3.5% and Infineon Technologies (OTCQX: IFNNY.US) 3% in the red.
Germany's Siemens (NYSE: SI.US) is also under additional pressure, currently down just under 1%, as news emerges that the UK's Invensys (LSE: ISYS), for which Siemens has long been rumoured to be a potential buyer of their rail division, has received a preliminary approach from Emerson Electric, although the company did say talks are now over.
The weakness in industrials is reflected across the majority of European bourses, with Ireland's CRH (NYSE: CRH.US) currently the worst performer on the Euro Stoxx 50, down 2.3%. In addition, losses in the commodity markets today are also hitting mining and energy stocks, with France's TOTAL (NYSE: TOT.US) one of the worst performers, down 1.5%.
On a more positive note, the telecoms sector is seeing a boost across European markets amid news that America Movil (NYSE: AMX.US) succeeded in increasing its stake in the Dutch Monopoly Royal KPN. This comes following Movil's move last week to purchase a 21% share of Telekom Austria (OTC: TKAGY.US), and is seen as further signs that billionaire owner Carlos Slim is looking to expand his assets beyond Latin America, taking advantage of bargain hunting opportunities in Europe. Deutsche Telekom (OTCQX: DTEGY.US) and France Telecom (NYSE: FTE.US) currently lead European gains in the sector, up 1.9% and 2% respectively.
As always, this morning's European news saw some winners and losers -- and perhaps some European buying opportunities. Indeed, legendary investor Warren Buffett has recently spent more than $1 billion buying the stock of a prominent European large cap.
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> Karl does not own any share mentioned in this article.