The French market declined on Friday, as economic worries deepened after Moody's Investors Service downgraded 16 Spanish banks. The action by Moody's and some disappointing economic data from the U.S. overnight impacted markets across the world.
Moody's downgraded the banks citing rising loan defaults, a renewed recession in Spain, restricted funding access and the reduced ability of the Spanish government to support lenders.
Moody's said, "The Spanish economy has fallen back into recession in first-quarter 2012, and Moody's does not expect conditions to improve during 2012. Moreover, the real-estate crisis that began in 2008 is ongoing, and unemployment has risen to very high levels."
Fitch had on Thursday downgraded Greece's long term credit rating to CCC from B-, citing heightened risk that the nation may not be able to sustain its membership of Economic and Monetary Union.
Meanwhile, the Bank of Spain said the country's bad loans increased further in March. About 8.37 percent of loans held by banks in March were unpaid for more than three months. That compares to 8.3 percent in February. This was the highest bad debt ratio since 1994.
The Euro Stoxx 50 index of eurozone bluechip stocks is gaining 0.27 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, is falling 0.33 percent.
The CAC 40 index is currently losing 0.10 percent.
Michelin is declining 5.5 percent. Pernod-Ricard and EADS are losing 2.7 percent and 2.3 percent, respectively.
Renault is losing 1.2 percent while Peugeot is adding 0.9 percent.
Societe Generale, BNP Paribas and Credit Agricole are adding between 4.6 percent and 2.4 percent. Insurer Axa is gaining 1.7 percent.
Carrefour is up 2.1 percent and GDF Suez is gaining 1.7 percent.
Elsewhere in Europe, the German DAX is losing 0.27 percent and the UK's FTSE 100 is declining 0.78 percent. Switzerland's SMI is dropping 0.82 percent.
In economic news, Germany's producer price inflation slowed to the lowest level in twenty-two months in April, data released by the Federal Statistical Office showed. The output price inflation eased to 2.4 percent in April from 3.3 percent in March, while economists expected inflation to slow to 2.5 percent.
Across Asia/Pacific, major markets ended lower. Australia's All Ordinaries retreated 2.6 percent and China's Shanghai Composite Index lost 1.44 percent. Hong Kong's Hang Seng and Japan's Nikkei 225 yielded 1.3 percent and 3 percent, respectively.
In the U.S., futures point to a higher open on Wall Street. In the previous session, stocks saw substantial weakness as traders reacted negatively to a disappointing batch of U.S. economic data. The major averages ended the session at or near their lows for the session. The Dow fell 1.2 percent, the Nasdaq plummeted 2.1 percent and the S&P 500 dropped 1.5 percent.
In the commodity space, crude for June delivery is sliding $0.04 to $92.52 per barrel while June gold is rising $15.6 to $1590.5 a troy ounce.
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