The European markets are moderate to notably lower in afternoon trading Tuesday, after Moody's lowered the European Union's long-term issuer rating outlook and Spain's Andalusia joined the 'bailout club.' The U.S. index futures have turned lower, indicating a weak open for the markets after the Labour Day holiday.
Moody's Investors Service has downgraded the credit outlook on the European Union's AAA rating to 'negative' from 'stable,' reflecting the negative outlooks on EU's triple-A rated budget contributors.
The rating agency said that the move reflected the negative outlooks now assigned to the Aaa sovereign ratings of key contributors to the EU budget, including Germany, France, the UK and the Netherlands. These countries together account for around 45 percent of the EU's budget revenue.
According to reports, during the closed-door meeting of the lawmakers, European Central Bank President Mario Draghi defended a number of measures introduced by the ECB, including the controversial bond-purchase plan, and indicated that the central bank is not averse to buying government bonds of up to 3-year maturities on the secondary market.
Andalusia joined Spain's 'bailout club' by seeking 1 billion euros in emergency lifeline from the government on Monday. Andalusia is the fourth Spanish region to ask for immediate funding from the central government.
Meanwhile, unemployment in Spain increased in August after four consecutive declines in the past months, data released by the Ministry of Employment and Social Security showed. The number of registered unemployed rose by 38,179 between July and August, representing a rate of growth of 0.83 percent, following a decline of 0.6 percent in July.
The U.K. construction sector shrank unexpectedly in August, data released by Markit Economics showed. The Markit/Chartered Institute of Purchasing & Supply Construction Purchasing Managers' Index dropped to 49 from 50.9 in July.
The Euro Stoxx 50 index of eurozone bluechip stocks is falling 0.21 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, is losing 0.82 percent.
The German DAX is losing 0.48 percent and the French CAC 40 is falling 0.60 percent. The UK's FTSE 100 is retreating 1.03 percent and Switzerland's SMI is dropping 0.98 percent.
In Frankfurt, Volkswagen, MAN and BMW are declining between 1.9 percent and 1.6 percent. Daimler is down 0.5 percent. Citigroup removed Volkswagen from Most Preferred List.
Qiagen is losing 0.7 percent. UBS removed the stock from Least Preferred List.
Deutsche Bank is falling 0.3 percent while Commerzbank is gaining 0.7 percent.
Insurer Allianz is climbing 1.2 percent.
Hospital operator Rhoen-Klinikum is advancing over 1 percent even after some negative broker recommendations.
In Paris, hotel chain Accor is retreating 2.3 percent. Drugmaker Sanofi is falling 1.8 percent.
Renault is declining 1.5 percent and Peugeot is losing 0.7 percent. Airbus maker EADS is dropping 1.8 percent.
Michelin is losing 0.9 percent. Citigroup added the stock to Most Preferred List.
Unibail-Rodamco is falling 1.3 percent. Exane cut the stock to "Underperform" from "Outperform."
Banks are in positive territory. Credit Agricole is rising 1.5 percent and Societe Generale is advancing 1.5 percent.
In London, miners are trading lower. BHP Billiton is losing 1.5 percent and Rio Tinto is declining 2.2 percent.
Barclays is losing 0.6 percent. JPMorgan reduced its rating on the stock. Royal Bank of Scotland is dropping around 2 percent.
Vodafone is declining 2.3 percent. Bernstein cut the stock to "Marketperform" from "Outperform."
Ashtead Group is surging nearly 12 percent. The industrial equipment rental firm reported a higher first-quarter profit, and expects full-year results materially ahead of its previous expectations.
Petrofac is gaining 1.3 percent.
Clariant is losing over 1 percent in Zurich after ING downgraded the stock.
Across Asia/Pacific, major markets ended lower. Australia's All Ordinaries fell 0.60 percent, China's Shanghai Composite Index dropped 0.75 percent and Hong Kong's Hang Seng retreated 0.66 percent. Japan's Nikkei 225 slid 0.1 percent.
In the commodity space, crude for October delivery is advancing $0.37 to $96.95 per barrel and December gold is rising $5.8 to $1693.4 a troy ounce.
by RTT Staff Writer
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