Investors will have to deal with an avalanche of news flow from Europe on Wednesday ahead of a crucial meeting of euro zone finance ministers and US Treasury Secretary Tim Geithner on Friday.
First up is a downgrade of two French banks by Moody’s. The credit ratings agency has cut Societe Generale and Credit Agricole and announced it will extend its review of BNP Paribas .
Moody’s put the French banks on review nearly 90 days ago amid fears over exposure to Greece but has since become worried about the banks' funding and liquidity profiles.
Both Credit Agricole and BNP Paribas have followed the lead of Societe Generale and announced on Wednesday measures aimed at shoring up confidence.
Credit Agricole has announced a mechanism to formally support its investment banking operations. BNP Paribas has warned that the crisis in Greece may hit third-quarter results as it said it will cut its balance sheet by 10 percent by the end of next year via asset sales.
The problems facing Greece will take center stage later on Wednesday when Angela Merkel, Nicolas Sarkozy and Greek Prime Minister George Papandreou hold a conference call to discuss the current crisis.
The call should shape Friday’s meeting of euro zone finance ministers in Poland and will aim to find a way of shoring up confidence in the political response to the crisis.
Over in Rome two crucial votes are expected on the revised 54 billion euros ($73.5 billion) austerity measures. At 13:00 London time, Italy’s lower house of parliament will hold a confidence vote in Silvio Berlusconi’s government before voting on the austerity package itself at 19:00.
On Tuesday the Italian Treasury was forced to offer record interest rates to push through the sale of 6.49 billion euros in 5 year bonds.
Late on Tuesday, the IMF warned Portugal to cut wasteful spending and called for “bold move” to cut social security contributions. Portugal, like Ireland and Spain, has so far managed to steer clear of the problems facing Greece and Italy.
Finally Chinese Premier Wen Jibao has told the EU China stands ready to help its biggest trading partner but called on its leaders to stop the current crisis from getting out of hand.
The comments, made at the beginning of the World Economic Forum’s summer meeting in Dalian, China, come as other members of the BRICS (Brazil, Russia, India, China and South Africa) are reportedly looking to help shore up confidence in the euro zone by buying its bonds.
Officials from Brazil and India have told the Reuters news agency that there are preliminary talks under way and a decision on whether to buy euro zone bonds could be made at a meeting in Washington on September 22.
The head of the IMF, Christine Lagarde, told the Wall Street Journal on Wednesday that the plan was very interesting as she refused to step back from her call for Europe’s banks to be recapitalized.
CNBC’s Carolin Schober and Michelle Caruso-Cabrera will report live from Athens on Wednesday.
Tim Geithner speaks exclusively to CNBC at 8:30 New York time/13:30 London time.