LONDON Nov 20 European shares edged lower on
Tuesday, with the French CAC a core euro zone laggard
after ratings agency Moody's issued a long-awaited downgrade of
France's credit rating.
The cut was largely in the price, however, analysts said,
adding that the previous session's sharp gains - when the
FTSEurofirst 300 posted its biggest daily gain in 10
weeks - meant some were using it as a reason to take profits.
At 0811 GMT, France's CAC 40 was down 0.5 percent,
while the FTSEurofirst 300 index was 0.3 percent lower at
1,088.66 points. It had surged 2.3 percent on Monday.
"It (the France downgrade) is disappointing and an
indication that core Europe is suffering a bit. But the market
has been talking about this for a while. It's just a knee-jerk
reaction, and not a game changer," Graham Bishop, senior equity
strategist at Exane BNP Paribas, said.
"We expect that by the year end, we will recover some of the
losses we made over the last month and start the new year
broadly in a positive trajectory. We like industrials, media,
business services and banks, but don't like sectors such as food
and beverages and luxury goods."
Moody's Investors Service downgraded France's sovereign
rating by one notch to Aa1 from triple-A after the market close
on Monday, citing the country's uncertain fiscal outlook as a
result of its weakening economy. It followed a cut by peer
Standard & Poor's in January and was widely expected.
Cyclical shares suffered, with banks down 0.9
percent and autos falling 0.6 percent.