Europe chem stocks fall as Fitch downgrades Spain's credit rating

08 June 2012 12:14  [Source: ICIS news]

LONDON (ICIS)--European chemical stocks fell on Friday, in line with financial markets, following the downgrade of Spain’s credit rating by ratings agency Fitch.

Fitch said it downgraded the country’s rating because of the high fiscal cost of restructuring and recapitalising the Spanish banking sector, and the likelihood that Spain will remain in recession through 2013.

“The negative outlook on Spain's sovereign ratings indicates a heightened risk of further downgrades and primarily reflects the risks associated with a further worsening of the eurozone crisis,” said Fitch.

According to an unconfirmed report by news agency Reuters earlier on Friday, Spain is to ask for a bailout package on Saturday due to the country’s worsening banking sector situation.  

At 10:01 GMT, the UK’s FTSE 100 was down by 0.45%, Germany’s DAX had dropped by 0.97%, and the CAC 40 in France was down by 1.26%.

With European indices trading lower, the Dow Jones Euro Stoxx Chemicals index was down by 0.52%, as shares in many of Europe’s major chemical companies fell from the previous close.

Petrochemical major BASF’s shares had fallen slightly by 0.20%, while fellow Germany-based chemical company Bayer’s shares were trading down by 0.81%.

Shares in Germany’s LANXESS were down by 2.44%, while Switzerland-based company Clariant’s shares were trading down by 2.88% from the previous close.

France-based Arkema’s shares were trading down by 1.33% from the previous close.

Continued fears over the eurozone were also having an impact on crude oil prices.

At 10:30 GMT, the front-month July ICE Brent contract fell to $98.10/bbl, a loss of $1.83/bbl from the last close.

At the same time, the front-month July NYMEX WTI contract was trading around $82.70/bbl, a loss of $2.12/bbl against the previous close.

Earlier in the week, European financial markets had improved on expectations that the European Central Bank (ECB) would cut interest rates and provide the troubled economies with more financial stimulus. However, on Wednesday the ECB held interest rates at 1.0%.

By: Leigh Stringer
+44 208 652 3214

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