London equities fell at the start of trading on Tuesday, as investors digested news that Moody’s has stripped France of its coveted triple-A credit rating, analysts said.
London’s FTSE 100 index of top companies shed 0.42 percent to 5,713.81 points in early deals.
In Paris, the benchmark CAC 40 index dropped 0.27 percent to 3,430.24 points, as Moody’s cut the French government bond rating by one notch to “Aa1″ and warned that an additional downgrade was possible.
“Ten months after ratings agency Standard and Poor’s, Moody’s pulled the trigger on France’s triple-A rating last night, downgrading it to Aa1 with a negative outlook citing an uncertain fiscal outlook along with a gradual sustained lack of competitiveness and deteriorating economic prospects,” said CMC Markets analyst Michael Hewson.
“The agency also warned that the ability of the French economy to respond to further shocks was diminishing due to the country’s high exposure to the rapidly deteriorating Spanish and Greek economies.”
Meanwhile, eurozone finance ministers were due to meet in Brussels on Tuesday on a likely agreement to hand debt-plagued Athens the latest installment of cash it needs to avoid bankruptcy.
In Asia, Tokyo stocks closed in negative territory on Tuesday, with the benchmark Nikkei snapping a four-session winning streak as the Bank of Japan held off fresh easing to stoke the nation’s slowing economy.
The Nikkei 225 index at the Tokyo Stock Exchange slipped 0.12 percent, or 10.56 points, to 9,142.64.
The fall followed a surge on Wall Street Monday with the Dow Jones Industrial Average shooting up 1.65 percent to close at 12,795.96 on hopes that US lawmakers will agree a deal to avert a fiscal cliff that will likely send the economy into recession.
FTSE dips after Paris downgrade
