European stocks turn higher but gains limited; DAX up 0.42%

Investing.com - European stock markets turned moderately higher on Monday, but gains were limited as investors were jittery after ratings agency Standard & Poor’s downgraded nine euro zone countries on Friday, including France.

During European afternoon trade, the EURO STOXX 50 rose 0.23%, France’s CAC 40 edged up 0.07%, while Germany’s DAX 30 climbed 0.42%.

Sentiment was hit after S&P cut ratings on Italy, Spain, Cyprus and Portugal by two notches and downgraded Malta, Slovakia and Slovenia by one level. Germany kept its triple-A rating.

The ratings agency also said it would decide shortly whether to do the same for the euro zone’s bailout fund, the European Financial Stability Facility.

Earlier Monday, a top official of the International Monetary Fund warned against a "downward spiral of collapsing confidence" if no further action is taken to tackle the euro zone’s financial woes.

Financial stocks were mixed as France’s Societe Generale advanced 0.37%, while BNP Paribas tumbled 1.26% and German lender Deutsche Bank declined 0.55%.

Meanwhile, Carnival Plc plunged 16.01%, the biggest slide since 2008, after its cruise liner capsized off the Italian coast on January 13, injuring about 60 people. The ship, carrying more than 4,000 passengers and crew, hit submerged rocks in the Tyrrhenian Sea.

Elsewhere, Fiat and Daimler led a rally in carmakers, with shares jumping 3.02% and 2.83% after Goldman Sachs Group recommended the industry. Daimler was also added to Goldman’s “conviction buy” list.

In London, FTSE 100 eased up 0.01%, after data showed that house price inflation declined 0.8% in January, after a 2.7% fall the previous month.

Financial stocks were mixed as shares in the Royal Bank of Scotland jumped 1.08% and HSBC Holdings edged 0.02% higher, while Lloyds Banking and Barclays dropped 1.83% and 1.18%.

Meanwhile, mining giants Bhp Billiton and Rio Tinto turned higher with shares adding 0.82% and 0.02%, while copper producers Xstrata was down 0.07%.

Elsewhere, Rockhopper Exploration Plc surged 9.92%, its biggest rally in a month, after the Sunday Times reported that Cairn Energy Plc has held talks with the U.K. company that discovered oil near the Falkland Islands off Argentina.

Also Monday, European Central Bank President Mario Draghi was to testify before the European Parliament's Economic and Monetary Affairs Committee, while markets in the U.S. were to remain closed for a national holiday.