-Moody's confirmed Spain's government bond rating, with a negative outlook
-Spanish 10 year bond yields drop 34bp to 5.47 per cent
-German 10 year bond yields rise 9bp to 1.63 per cent

FTSE-100: 0.69%
Dax-30: 0.25%
Cac-40: 0.76%
FTSE-Mibtel 30: 1.56%
Ibex 35: 2.37%
Stoxx 600: 0.47%

European equities closed the day with moderate gains -outsized in the periphery- following ratings agency Moody's decision last night to maintain Spain's investment grade rating on the country's debt.

That ahead of tomorrow's summit of Eurozone leaders and Chinese GDP data.

Worth noting, amongst the reasons cited by Moody's for its decision, is that: "the rating agency believes that Spain will likely apply for a precautionary credit line from the European Stability Mechanism (ESM)."

Furthermore, Moody's does not believe that the above would lead -in and of itself- to a downgrade, although it does warn that certain events could still see the rating drop to "junk," with a potential exit of Greece from the single currency area posing a major event-risk.

Also of interest, in an interview with Il Corriere della Sera, International Monetary Fund (IMF) Chief Economist Olivier Blanchard said that in particular it was "crucial" to have a plan "in the short-term" that included guarantees that both Spain and Italy will be able to finance themselves while moving forward with their austerity measures.

Strong gains for Danone and Alcatel

Danone was down by 3% after reporting a slowdown in revenues at its main dairy division.

Dutch semiconductor equipment maker ASML dropped 5% after forecasting fourth-quarter sales that trailed behind projections. As well, the company will acquire Cymer for $2.6bn.

PSA Peugeot advanced 4% as Le Figaro said the French government may bail out the automaker's credit unit.

French phone equipment maker Alcatel-Lucent won a contract to deploy the largest share of China Mobile's new TD-LTE trial network rollout as it extends services to 10 cities.

From a sector stand-point the best performers were to be found in the following industrial groups within the DJ Stoxx 600: Basic resources (3.12%), Construction&Materials (1.45%) and Oil&Gas (1.20%).

Eurozone construction output grew by 0.7% month-on-month in August, following a fall of 0.3% in the month before.

Single currency at one month high
The euro/dollar is now slightly higher, up by 0.19%, to the1.3123 level.

Front month Brent crude futures are down by 0.769 dollars to the 113.14 dollar mark on the ICE.



AB

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