Reports emerged over the week-end that the US Republican party and President Barack Obama were close to a deal on the US debt ceiling, and that a proposal would be put before US law-makers before the Asian markets opened; that did not happen, and as a consequence European markets are in a downbeat mood.

In Paris, the CAC is off 28 at 3,814 while in Frankfurt, the DAX is down 48 at 7,259.

The roller-coaster for banks continues, with lenders diving after ratings agency 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.

The agency 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.

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 Deutsche Bank and Commerzbank the worst performers among Dax constituents.

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.

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

CAC 40 - Risers
Peugeot (UG) € 30.35 +0.86%
Unibail-Rodamco (UL) € 158.55 +0.57%
EDF (EDF) € 27.24 +0.26%
EADS (EAD) € 24.90 +0.24%
Total (FP) € 39.49 +0.09%

CAC 40 - Fallers
Credit Agricole (ACA) € 9.24 -2.01%
BNP Paribas (BNP) € 47.90 -1.88%
AXA (CS) € 14.09 -1.74%
Societe Generale (GLE) € 37.49 -1.55%
Natixis SA (KN) € 3.32 -1.25%
ST Microelectronics (STM) € 6.40 -0.94%
Vivendi (VIV) € 17.59 -0.93%
Alstom (ALO) € 39.13 -0.91%
Saint Gobain (SGO) € 42.16 -0.74%
Bouygues (EN) € 27.39 -0.71%

Related share prices
Bank of Ireland (Governor & Company of the) (BKIR) share price