European economic news round-up

Update: S&P has just announced it is making one more downgrade, to a critical issuer of European debt: the European Financial Stability Fund has lost its AAA rating. In parallel with France, it has gone from AAA to AA+.

Last Friday, Standard & Poor's downgraded several euro-zone countries credit ratings, most notably France, which went from AAA to AA+. The headline the next day Britain's Guardian newspaper was  "Friday the 13th" with its attendant implications of misfortune.

Today, there was no sign of Jason Voorhees ripping up Europe.  The financial markets shrugged everything off. The CAC 40 in Paris finished up 0.9 percent while the DAX 30 in Frankfurt closed up 1.25 percent. The FTSE in London was up 0.4 percent. Not exciting but not negative.

Reuters reports both the euro and pound sterling traded near 18 month lows during the day but finished ever so slightly up on their closing prices last Friday. Sterling was at $1.5307 and the euro at 1.2673.

France even sold 8.6 billion euros worth of short term debt and the benchmark yield on its 10-year bonds fell 4 points.

So, no knock on effect from S&P.

There was a fair amount of political activity. French President Nciolas Sarkozy went to Madrid to meet with Spain's new Prime Minister Mariano Rajoy. he acknowledged that he had put off a summit meeting this week with German Chancellor Angela Merkel and Italian Prime Minister Mario Monti. An unnamed official cited scheduling conflicts.

Finally, the Daily Telegraph's blog of the day's events – always interesting – notes that the Occupy movement has arrived in Davos. With a week to go before the annual plutocrats get together, Occupy's Camp Igloo is under construction (good photo in the blog).

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