14 June 2012 12:02 [Source: ICIS news]
LONDON (ICIS)--European chemical stocks fell on Thursday, in line with financial markets, following the downgrade of Spain and Cyprus’ government bond ratings by ratings agency Moody’s.
Moody’s downgraded Spain’s government bond ratings on Wednesday, and also placed it on review for a possible further downgrade.
The agency said the downgrade was largely a result of Spain’s struggling banking system and its intention to recapitalise by borrowing €100bn ($127bn) from the European Financial Stability Facility.
“Spain's rating – as well as the ratings of other euro area countries – could be adversely affected if the risk of a Greek exit from the euro area were to rise further,” it added.
At the same time, Moody’s downgraded Cyprus's government bond ratings, also placing it on review for a possible further downgrade.
“The key driver for today's rating action [on Cyprus] is the material increase in the likelihood of a Greek exit from the euro area, and the resulting increase in the likely amount of support that the government may have to extend to Cypriot banks,” said Moody’s.
At 09:41 GMT, the UK’s FTSE 100 financial market was down by 0.80%, Germany’s DAX had dropped by 0.73%, and the CAC 40 in France was down by 0.91%.
With European indices trading lower, the Dow Jones Euro Stoxx Chemicals index was down by 0.56%, as shares in many of Europe’s major chemical companies fell from the previous close.
France-based Arkema’s shares were trading down by 2.75% from the previous close.
On Friday 8 June, ratings agency Fitch downgraded Spain's credit 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.
($1 = €0.79)
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