-S&P downgrades Spain to one notch above junk
-French CPI undershoots significantly
-Banks deposited 242.9bn euros overnight at the ECB

FTSE-100: 0.71%
Dax-30: 0.75%
Cac-40: 0.70%
FTSE-Mibtel 30: 0.26%
Ibex 35: -0.52%
Stoxx 600: 0.50%

European equities are relatively well behaved this morning despite ratings agency Standard&Poor's decision last night to downgrade Spain's credit rating to just one notch above junk status, at BBB-.

In fact, some observers are now speculating with the possibility that S&P's decision may serve to nudge Spanish authorities towards a bail-out decision.

Significantly, Spanish debt is similarly well-behaved at the moment and the price action may reawaken talk that ratings companies are now largely "irrelevant," comment analysts at Digital Look, although "this is premature" they add. In a similar vein, analysts at ING point out that Spain's bonds are already trading at junk.

German Finance Minister Wolfgang Schaeuble said today euro-area governments have agreed that any decision on Greece will be taken after the IMF, the European Commission and the ECB publish their review. That after IMF Managing Director Christine Lagarde said today that Greece should get two years to meet fiscal targets. Furthermore, she suggested debt reductions are needed before a €130bn ($167bn) bailout can proceed.

Shares of Carrefour are rising after reporting forecast-beating third quarter sales.

Analysts at Deutsche Bank have downgraded their view on shares of Siemens to hold from buy.

The best performing sectors within the DJ Stoxx 600 at the moment are: Household goods (1.75%), Automobiles (1.02%) and Chemicals (0.90%).

Inflation drops back unexpectedly

Germany's consumer price index (CPI) for the month of September has fallen slightly, to 2.0% year-on-year, after a reading of 2.1% for the month before.

France's CPI for the same month dropped at a 0.3% month-on-month pace in September, well below the unchanged reading expected by most economists.

Likewise, Spain's CPI has nudged lower, to 3.4% year-on-year, after a reading of 3.5% for the previous month.

German wholesale prices increased at a 2% year-on-year clip in September, the same as expected and as last month's reading.

Slight rise in the single currency

The euro/dollar is now up 0.61% to the 1.2930 mark.

Front month Brent crude futures are now rising by 1.056 dollars to the 115.57 dollar mark on the ICE.



AB

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