Europe Economy

FTSE, DAX, CAC to Open Lower; Bad News Piles Up

European stocks were indicated to open lower on Tuesday, as more bad news about the debt crisis and the economic health of the euro zone came overnight.

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The FTSE was indicated lower by 41 points, the CAC was seen falling by 11 points and the DAX was due to open two points down.

Credit rating agency Standard and Poor's cut its ratings on Italy by one notch to A/A-1 and maintained a negative outlook, saying political squabbles were preventing the government from implementing measures that would deal with the economic challenges.

In Greece, a teleconference between the government and members of the so-called "Troika" – representatives of the International Monetary Fund, the European Union and the European Central Bank – have ended without an agreement Monday night,but they will continue on Tuesday.

Europe's banking sector was again in the spotlight as Reuters reported that a big, market-making state bank in China's foreign exchange market stopped forex forwards and swaps trading with some European banksbecause of the crisis in the euro zone.

Siemens has withdrawn about 500 million euros ($680 million) in cash from a big French bank and transferred it to the ECB, the Financial Times reported. A source told the paper that Siemens took the money out partly because of worries about the bank's financial health and partly to take advantage of higher rates paid by the ECB.

Without major economic data due out, investors will look to Greece's auction of 1.25 billion euros worth of 13-week T-bills to gauge sentiment in the markets. Also in Greece, a public sector union will hold a rally to protest cost cuts.

In the UK, the interim Financial Policy Committee, set up by the government as part of reforming financial regulation, will meet, but the minutes of Tuesday's meeting will not be published until October 3. 

Committee members include Bank of England Governor Mervyn King, Financial Services Authority Chief Exec Hector Sants, and FSA Chairman Lord Turner.

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