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European Stocks Decline as Moody’s Downgrades France

Published: November 20, 2012 | 8:15 am
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European stocks fell, after the Stoxx Europe 600 Index jumped the most in two months yesterday, as Moody’s Investors Service downgraded France and euro-area finance ministers prepared to meet. U.S. index futures declined, while Asian shares rose.
BNP Paribas SA (BNP) and Societe Generale SA (GLE) paced losses among French lenders. Credit Suisse Group AG (CSGN) fell 3.1 percent after saying it will reorganize its investment bank.
The Stoxx 600 (SXXP) retreated 0.3 percent to 267.73 at 8:03 a.m. in London. The gauge has still rallied 15 percent from this year’s low on June 4 as the European Central Bank announced an unlimited bond-buying plan and the Federal Reserve began a third round of asset purchases. Standard & Poor’s 500 Index futures declined 0.3 percent today, while the MSCI Asia Pacific Index increased 0.1 percent.
“Moody’s ratings agency pulled the trigger on France’s triple-A rating last night,” Michael Hewson, a market analyst at CMC Markets Plc in London, wrote in e-mailed comments. “It could have a trickledown effect down through the French banking system, with potential downgrades for French banks, feeding through into higher borrowing costs.”
Moody’s downgraded France to Aa1 from Aaa and maintained a negative projection, citing a worsening growth outlook for Europe’s second-largest economy. Standard & Poor’s cut the nation’s rating in January.

Greek Gap
European finance ministers will discuss ways to fill a 15 billion-euro ($19.2 billion) gap in Greece’s public accounts at a meeting scheduled for 5 p.m. in Brussels today. The options under consideration include recycling ECB profits on Greek bonds, charging Greece lower interest rates and extending repayment deadlines.
Last week, European leaders granted Greece two extra years to cut its budget deficit. The required extra financing resulted in a clash with the International Monetary Fund, since it would add to Greece’s debt load instead of reducing it.
In the U.S., a Commerce Department report at 8:30 a.m. Washington time may show housing starts in October probably declined from a month earlier. Builders broke ground on 840,000 houses at an annual rate, following an 872,000 pace in September, according to the median estimate of economists in a Bloomberg survey.
BNP retreated 1.2 percent to 40.60 euros and SocGen lost 0.8 percent to 25.58 euros.
Credit Suisse slipped 3.1 percent to 20.90 Swiss francs after saying it will reorganize its investment bank and merge asset management with the private bank to cut costs and reduce complexity.

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