Euro Stocks Set To Shrug Off Portugal at Start

European stocks are called to follow Asia and open higher on Friday, despite another ratings downgrade for Portugal, this time from Standard & Poor's.

Sharon Lorimer

According to BGC Partners, the UK's FTSE 100 index will open 42 points higher at 5,922, while Germany's DAX index could jump 49 points to 6,982 and France's CAC index may increase by 25 points to 3,993.

S&P was the second ratings agency to downgrade Portugal in as many days. It cut the country's credit ratings by two notches to BBB and warned of another cut as soon as next week. The moved comes a day after Fitch cut Portugal long-term foreign- and local-currency issuer ratings to A-minus from A-plus.

European shares rose to a two-week high on Thursday, with the FTSEurofirst 300 index of top shares closing up 1.1 percent at 1,124.14 points.

European leaders continue their two-day summit Friday.

The Ifo institute releases its influential German business sentiment indicator Friday. The figure will provide investors with an indication of business morale in the euro zone's largest economy.

Other political factors likely to affect stocks Friday include developments in Libya, where Western warplanes hit Libyan tanks on a fifth night of airstrikes on Thursday.

The nuclear crisis in Japan also continues to weigh on investor sentiment. Many shops in Tokyo ran out of bottled water on Thursday after radiation from a damaged nuclear plant made tap water unsafe for babies, while more countries imposed curbs on imports of Japanese food.