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Europe open: Rally stalls after ratings cut for banks

LONDON (ShareCast) - The decision by ratings agency Standard and Poor's to cut its ratings on fifteen of the largest banks from both the United States and Europe (Chicago Options: ^REURUSD - news) has stopped the recent European stock market revival in its tracks. According to the ratings agency, the downgrades are the result of the expected application of its new ratings methodology, as was previously announced on the 9th of November (Stuttgart: A0Z24E - news) . Among the European banks downgraded are UK lenders Barclays (LSE: BARC.L - news) , HSBC (LSE: HSBA.L - news) , ING, Lloyds and Royal Bank of Scotland (LSE: RBS.L - news) , plus Swiss banks UBS (NYSEArca: DJCI - news) and Credit Suisse (NYSEArca: CSMA - news) . German bank Deutsche Bank (Xetra: 514000 - news) also got the treatment from Standard & Poor's (S&P), as its outlook was cut to "negative" from "stable". The pan-European Euro Stoxx 50 index is down 22, or 1%, at 2,212. In Paris, the CAC 40 (Paris: ^FCHI - news) index is off 28 at 2,999 while in Frankfurt the DAX (Xetra: ^GDAXI - news) is 59 points in the hole at 5,741. "International companies are said to be preparing contingency plans for a possible break-up of the Eurozone, which is not something that will restore some form of confidence," noted Simon Furlong, a trader at spread betting firm Spreadex. "A European stability bond has finally been mentioned by European leaders, although no details have yet to be released. However, this solution does seem at a first glance to be a compromise between what Europe needs, and what Germany is willing to allow," Furlong opined. Corporate news is thin on the ground, with most of the third-quarter updates now well out of the way, so broker commentary is one of the main factors driving share price movements; an example being German luxury car maker, Daimler (Xetra: 710000 - news) , which is slipping back after JP Morgan cut its rating on the stock to "neutral" from "overweight". MACRO-ECONOMY There were several macroeconomic indicators released early this morning in Europe: United Kingdom: GfK (Hanover: 587530 - news) consumer confidence for November: -31. Consensus forecast: -33. Previous: -32. Germany: Retail sales for October: 0.7% month-on-month (m/m) and -0.4% year-on-year (y/y). forecast: 0.1% m/m (2.0% y/y). Previous: 0.3% m/m (0.6% y/y). France: Consumer spending for October: 0.3% m/m (-0.2% y/y). Forecast: 0.2% m/m (-0.2% y/y. Previous: -0.5% m/m (-1.3% y/y). France: Producer price index for October: 0.4% m/m (5.5% y/y). Forecast: 0.2% m/m (5.4% y/y). Previous: 0.2% m/m (6.1% y/y). CAC 40 - Risers Sanofi (Paris: FR0000120578 - news) (SAN) € 50.71 +0.58% L'Oreal (OR) € 77.65 +0.48% PPR (TLO: PPR.TI - news) (PP) € 105.20 +0.33% Essilor International (EI) € 52.08 +0.08% CAC 40 - Fallers Alcatel (Paris: FR0000130007 - news) -Lucent (ALU) € 1.18 -2.81% Cap Gemini (Hamburg: CGM.HM - news) (CAP) € 26.18 -2.62% Societe Generale (Paris: FR0000130809 - news) (GLE) € 16.84 -2.55% BNP Paribas (Other OTC: BNPQF.PK - news) (BNP (Paris: FR0000131104 - news) ) € 27.48 -2.45% ArcelorMittal SA (MT) € 12.26 -2.43% Renault (Milan: RNO.MI - news) (RNO) € 25.74 -2.31% Michelin (Euronext: ML.NX - news) (ML) € 44.09 -1.98% Peugeot (Hamburg: PEU.HM - news) (UG) € 12.95 -1.86% Natixis SA (KN) € 1.92 -1.64% Credit Agricole (Milan: ACA.MI - news) (ACA) € 4.32 -1.64% -- jh