Euro stocks higher on French auction; DAX up 1.25%
Published Jan 16, 2012 12:36PM ET
After the close of European trade, the EURO STOXX gained 1.01%, France's CAC 40 climbed 0.89%, while Germany's DAX closed up 1.25%. Meanwhile, in the U.K. the FTSE 100 added 0.37%.
Standard & Poor's downgraded France to AA+ from AAA with a negative outlook on Friday. The rating agency also slashed Cyprus, Portugal, Italy and Spain two levels.
Long term credit ratings were also lowered on Austria, Malta, Slovakia, and Slovenia. However, Germany, Ireland, Finland, Belgium, Estonia, Netherlands, and Luxembourg had their rating affirmed by S&P.
The debt market shrugged off the French downgrade at the sale of 51 week treasury bills. French borrowing costs dropped as the country sold eur1.895 billion of one year notes at a yield of 0.406%, down from 0.454% on January 9th.
Witold Bahrke of PFA Pension A/S explained to Bloomberg, "Rating downgrades are always a bit of old news and everybody already anticipated the move from S&P, but a positive is that President Sarkozy will have less leverage against Chancellor Merkel who's getting more room to push her agenda. We have seen a series of indicators showing macro economic conditions have improved."
Greek officials will reconvene with creditors on January 18th after the talks abruptly ceased last week, increasing default fears.
Carmakers soared on Goldman Sachs reiterating its "attractive" view on the industry. Fiat added 7%, Pirelli advanced 3.9% while Daimler was upgraded to "conviction buy" by Goldman Sachs sending shares higher by 3.9%
The recent cruise ship accident in the Tyrrhenian Sea sent shares of Carnival sinking 17% and Morgan Stanley lowered its outlook on the company to "equal weight".
In bearish news, Lundin Petroleum dropped 14% after the company stated it will likely reduce its estimates for the resources at the Avaldsnes discovery.
U.S. stocks were closed Monday due to the Martin Luther King holiday.
Investors are awaiting the German ZEW sentiment index and euro zone consumer price inflation figures on Tuesday.
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Written By: Investing.com
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