Europe Economy

European Stocks to Open Flat; Spain Rating Cut

European stocks were expected to open flat on Friday, with weak Chinese trade data and the S&P downgrade of Spain's credit rating on Friday likely to impact investor sentiment in Europe.

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The FTSE is called 4 points higher, the DAX in Frankfurt is expected to open up by 14 points and the CAC 40 is predicted to be higher by 13 points.

European stocks ended the day lower on Thursday. In Asia overnight on Friday, shares followed declines in London and New York as Chinese producer price data for September came in below market expectations.

Swiss bank UBS suffered further bad news late on Thursday as credit rating agency Fitch downgraded the bank from A+ to A and seven other US and European banks were put on credit watch negative.

Outgoing European Central Bank head Jean Claude Trichet said in an interview with the Financial Times that the bank has done all it can to support markets during the sovereign debt crisis and the onus is now on euro zone governments to press ahead with austerity measures to drive down deficits.

The FT also reported that Brazil, Russia, India and China are in talks to boost the coffers of the International Monetary Fund ahead of a G20 summit next month. The newspaper wrote that the BRIC nations are looking at ways for emerging economies to increase their role in finding a resolution to the European sovereign debt crisis.

G20 finance ministers will meet in Paris on Friday and Saturday to finalize their economic reform agenda before the summit of leaders and heads of state next month, while French President Nicolas Sarkozy is due to meet with European Commission head Jose Manuel Barroso.

Silvio Berlusconi's government will be hoping to survive a vote of no confidence in the Italian parliament on Friday which could potentially lead to the collapse of his government.

In Greece, a two-day transport strike continues on Friday, ahead of the beginning of an 'occupation' of the London Stock Exchange which is due to begin on Saturday and will see protesters set up a camp outside London Stock Exchange headquarters in the City of London.

Economic data out on Friday includes EU foreign trade and CPI figures for August at 10:00 London time.

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