European stocks were mixed in early trading today but rebounded later on as investors took their first opportunity to reactto ratings agency S&P's mass downgrade of euro zone countries on Friday.
Elsewhere, Japan's Nikkei average fell to a one-month closing low today after the downgrades of nine European countries, including a cut in France's triple-A rating, escalated fears over the region's ability to end its debt crisis.
Adding to market unease was an impasse in negotiations between Greece and private creditors on a debt swap deal, raising the risk of a Greek default in March when massive bond payments are due.
The FTSEurofirst 300 index of top European shares was barely changed from Friday's closing level but the main euro zone bank stock index fell around 1.1 per cent on fears the sector could be the next target for rating cuts.
Around Europe, the FTSE 100 index was up 0.26 per cent, Germany's DAX index was up 0.97 per cent, and France's CAC 40 was 0.51 per cent higher. The Iseq index of leading shares was up 0.83 per cent at 2932.59.
In Japan, the benchmark Nikkei fell 1.4 per cent to 8,378.36, back below its 25-day moving average near 8,467 after closing above the technical level on Friday.
Market participants said the only support came from heightened expectations of the Bank of Japan's buying of exchange-traded funds (ETFs) in afternoon trade.
The broader Topix fell 1.3 per cent to 725.24.
US markets are closed today for a national holiday and analysts said it would be difficult to move without cues from Wall Street.
The euro fell 0.2 per cent against the dollar at $1.2651 and still looked vulnerable to a test of Friday's 17-month low of $1.2624
Moody's today maintained France’s AAA credit rating and said it would review the situation by the end of the first quarter
Global leaders and businessmen urged Europe today to take fresh steps to resolve its deepening debt crisis, with a top executive of the IMF warning the continent will see a "downward spiral of collapsing confidence" if no further action is taken.
"Without ... action, Europe will be swept into a downward spiral of collapsing confidence, stagnant growth and fewer jobs," David Lipton, first deputy managing director at the International Monetary Fund, told the Fifth Asian Financial Forum in Hong Kong today.
Also speaking at the forum, European Union Internal Market and Services Commissioner Michel Barnier said the euro is here to stay as a global currency.
"The euro is here to stay. In the last 10 years the euro has proven itself as a true world currency. And despite the difficulties, it remains strong. The real crisis the euro zone faces right now is a crisis of confidence. Our political unity and our determination and our ability to rectify what is wrong are being tested," he said.
Mr Barnier also repeated his surprise at the decision of ratings agency S&P to downgrade euro zone countries on Friday and called for greater transparency in how such agencies reach their decisions.
Reuters
