European markets have taken a break from fretting over Greece's debt molehill and have moved on to chewing their nails over the US debt mountain.

Hopes were briefly raised over the week-end that a deal between Republicans and President Obama would be agreed to enable the US debt ceiling to be raised, thus staving off a US default, but the two sides are still wrangling.

Prices are off the bottom, however, at least in Paris and Frankfurt; in the former, the CAC is off 9 at 3,833 while in Frankfurt, the DAX is down 3 at 7,323.

Mediterranean markets are not so sanguine, after Moody's downgraded Greece's sovereign debt rating by three notches from Caa1 to Ca, a mere two stations above a rating that would signify a default. Investors are concerned that Spain and even Italy could be next in the firing line.

The IBEX in Madrid is down 110 at 9,948 and the MIB in Milan is down 234 at 19,226.

Ratings agency Moody's reckons the recently announced Eurozone bailout programme for Greece "implies that the probability of a distressed exchange, and hence a default, on Greek government bonds is virtually 100%."

There were some glimmers of optimism on the Greek situation, however, with Moody's saying the EU programme and proposed debt exchanges will give Greece a better chance of achieving stability and ultimately reducing its debt mountain.

"The support package for Greece also benefits all euro area sovereigns by containing the severe near-term contagion risk that would likely have followed a disorderly payment default or large haircut on existing Greek debt," Moody's said.

The agency assigned a "developing" outlook on Greece's debt, instead of the more usual "positive" or "negative" outlooks.

Banks are hardest hit by Moody's move. In Paris, lenders Credit Agricole and BNP Paribas are the two worst performing CAC 40 constituents, and only insurance giant AXA prevents banking giant Societe Generale making it a hat-trick of misery for French lenders.

In Frankfurt, the situation is similar with Commerzbank and Deutsche Bank the worst performers among Dax constituents. Belgian lender Dexia also gets the cold shoulder while in Italy, Banca Popolare di Milano is on offer.

In Ireland, however, Bank of Ireland is on the up after private equity investors signed up to buy up to €1.1bn of the government's stake in the lender. The deal will see government's stake in the bank falling to 32% or lower.

The state has agreed to sell around 4.2bn units of ordinary stock, representing around 14.0% of the Bank's fully diluted ordinary share capital, at a price of 10 cents per unit.

"The Bank is very pleased to see this major endorsement of the Bank's strategy and the confidence which these investors share with the Bank in the future for the Irish economy. The Bank very much appreciates the opportunity which the Minister has provided to the Bank to seek private capital sources to support its capital raising programme and to enable its existing stockholders to participate in the rights issue component of the capital raising programme," a statement from the Bank of Ireland said.

Elsewhere in Ireland, no-frills airline Ryanair is losing altitude after first quarter results disappointed. Revenue in the April to June period rose 29% year-on-year to €1,155.4m from €896.8m the year before, but adjusted profit before loss was stuck on the runway, edging forward just 1% to €139.3m from €138.5m.

The number of passengers carried shot up 18% from a year earlier to 21.3m from 18.0m, but the airline's loquacious chief executive, Michael O'Leary, admitted that the comparison was not a fair one, due to what he termed "the unnecessary airspace closures in April/May 2010 (following the Icelandic volcanic eruptions)."

Hansen Transmissions moved up a gear after ZF Friedrichshafen made an agreed bid of 65p per share, which values the company at £445m.

In broker action, outdoor advertising agency JCDecaux has been downgraded to "hold" from "buy" by Citi.

CAC 40 - Risers
Peugeot (UG) € 30.59 +1.64%
Michelin (ML) € 64.49 +1.53%
Schneider Electric (SU) € 108.10 +1.45%
Unibail-Rodamco (UL) € 159.65 +1.27%
Air Liquide (AI) € 97.45 +1.03%
EADS (EAD) € 25.07 +0.93%
Technip (TEC) € 76.21 +0.75%
Alcatel-Lucent (ALU) € 3.62 +0.67%
Sanofi (SAN) € 55.55 +0.62%
EDF (EDF) € 27.33 +0.59%

CAC 40 - Fallers
Credit Agricole (ACA) € 9.08 -3.79%
Societe Generale (GLE) € 36.90 -3.09%
AXA (CS) € 13.94 -2.76%
BNP Paribas (BNP) € 47.51 -2.68%
Natixis SA (KN) € 3.31 -1.52%
Bouygues (EN) € 27.19 -1.41%
Vivendi (VIV) € 17.51 -1.41%
Publicis Groupe Sa (PUB) € 36.58 -1.37%
Accor (AC) € 31.14 -1.02%
Cap Gemini (CAP) € 38.51 -0.77%

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Related share prices
Bank of Ireland (Governor & Company of the) (BKIR) share price
Gleeson (M J) Group (GLE) share price
Ryanair Holdings (RYA) share price
Hansen Transmissions International NV (DI) (HSN) share price