June 20, 2011
Sovereign debt issues continued to cast a dark shadow over European equity markets on Monday, as the question over when Greece will be awarded a second bail-out package remained unanswered.
Meanwhile, Moody’s warned late on Friday it was reviewing its position on Italian debt, with a possible view to a downgrade of its Aa2 rating. The agency said that the spread of risk-averse sentiment stemming from the Greek crisis and Italy’s own structural problems were responsible for the review.
Equities in Italy and Spain underperformed the pan-European market, with the FTSE MIB down 2.5 per cent and the Ibex index off 2 per cent in early trade. The FTSE Eurofirst 300 was down 1.1 per cent. The Athens General, however, was up 0.4 per cent as investors bought bargains in the country’s heavily sold industrial sector.
“The peripheral crisis has become more intense at the same time as business surveys have moderated. It is an uncertain and unhelpful mix for markets and for risk appetite,” said analysts at Barclays Capital.
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