1:45 PM Frankfurt – The European indexes edged lower after Moody''s lowered the European Union’s debt rating outlook to negative but held its top rating. European leaders ramp up diplomacy as the three-year old crisis drags on. Andalusia is the fourth Spanish region requiring financial assistance.
European leaders ramp up diplomacy this month as the three-year old financial crisis refuse to go away.
European Union President Herman Van Rompuy travelled to Berlin to meet Chancellor Angela Merkel and French President Francois Hollande meets Prime Minister Mario Monti in Rome.
European leaders have set a busy schedule this month ahead of the German court ruling about the legality of the setting up of the permanent bailout fund.
Also, European Central Bank is expected to announce its decision regarding bond purchase on Sept 6. On that day, European Commission President Jose Barroso and Chancellor Merkel are set to travel to Madrid to meet Spanish Prime Minister Mariano Rajoy.
Separately, Moody''s Investors Service lowered the European Union’s long-term issuer rating outlook to negative from stable. However, the triple-A rating of the European Union was left unchanged.
The downward revision reflects the negative outlooks now assigned to the Aaa sovereign debt ratings of key contributors to the EU budget, namely Germany, France, the UK and the Netherlands, which together account for around 45% of the EU''s budget revenue.
Separately, Andalusia became the fourth Spanish region requiring financial assistance to stabilize its economy. The region requested €1 billion from Madrid and the government is set to tap the €18 billion fund established to help debt-laden regions.
In what turns to be another twist to the euro zone crisis, unofficial leaked reports suggest that the European Central Bank meeting on Thursday will definitely be decisive.
Jean-Paul Gauzes, a member of the European Parliament from France said that Draghi told lawmakers that the purchase of short term bonds issued by state is within the framework of the European Union and does not constitute state financing.
In Paris trading, the CAC-40 Index declined 25.98 or 0.8% to 3,427.73 and in Frankfurt the DAX Index edged lower 41.79 or 0.6% to 6.973.04.
The yields on Spain’s benchmark 10-year fell nine basis points to 6.80%. Italian 10-year yields declined six basis points to 5.73%.
Gainers & Losers
Bankia SA gained 3.2% to €1.41 after Spain agreed to inject €4.5 billion or $5.7 billion to the troubled financial institution, a source from the Economy Ministry said today ahead of the agreed funds received from the euro zone bailout fund.
Koninklijke Ahold N.V. soared 4% to €10.24 after the Dutch retailer said it is exploring strategic options for its 60% stake in Scandinavian retailer, ICA.
European Aeronautic Defence and Space Co. fell 1.8% to €30.25 after the aerospace and defence contractor appointed Bernhard Gerwert as Chief Executive Officer of Cassidian and Member of the EADS Executive Committee.
Novartis AG fell 1.1% to Sfr55.90 after the healthcare solutions provider said that the U.S. Food and Drug Administration approved a higher dose of Exelon Patch for the treatment of people with mild to moderate Alzheimer''s disease.