Europe Markets

FTSE, CAC, DAX to Open Lower After Mass Downgrade


European stocks were called to open lower on Monday tracking Asia overnight where stocks fell following a mass downgrade of nine euro zone countries on Friday.

Close-up of a pen on stock price chart

The FTSE is called 22 points lower, the DAX in Frankfurt is expected to be down by 25 points and the CAC 40 is called lower by 13 points.

After weeks of speculation, credit rating agency Standard and Poor's (S&P) downgraded the credit ratings of France, Italy, Austria and six other European countries on Friday prompting German Chancellor Angela Merkel to announce at the weekend that Europe must now speed up plans to introduce measures for greater fiscal unity within the euro zone.

ECB governing council member Ewald Nowotny said on Sunday that the European Central Bank will act to calm nerves following the S&P downgrades and he expressed particular concern about the downgrading of Italy by two notches.

Nowotny described the downgrades as "really dangerous" for Europe and Italy's downgrade as "very dramatic".

German Foreign Minister Guido Westerwelle said he remained optimistic that a bond swap deal to reduce Greece's massive deficit could still be reached in a visit to the country on Sunday.  Westerwelle's comments followed a break down in discussions between the Greek administration and private holders of Greek debt on Friday.

Failure to reach a deal on a debt write down for private bondholders is likely to result in a default in March when Greece is due to redeem 14.5 billion euros ($18.4 billion) in bonds.

Two bond auctions will take place in Europe on Monday starting with a Dutch tender of 3 and 6 month bonds at 10:00am London time while France will auction around 7-8 billion euros of treasury bills at 1:50pm GMT.

French Finance Minister Francois Baroin will address a country risk conference organized by French export credit insurer Coface on Monday, while President Nicolas Sarkozy meets Spanish Prime Minister Mariano Rajoy in Madrid.

In Britain, the Ernst &Young sponsored independent economic forecasting group the Item Club will announce its Winter Economic Forecast for the UK economy.

A ban on the short selling of bank shares is due to end in Italy on Monday after it was imposed in August 2011 and subsequently extended.

Sales growth for Swiss luxury goods group Richemont jumped 24 percent in the third quarter, while chocolate producer Lindt & Spruengli reported full year sales of 2.49 billion Swiss francs ($2.60 billion) on Monday.

French retailer Casino and semiconductor firm Soitec will announce their fourth and third quarter results on Monday, while UK-based Bovis Homes is due to issue a trading statement.

US markets will remain closed on Monday due to the Martin Luther King, Jr. federal holiday.