World stocks mixed before Greek debt talks

LONDON: World stocks were mixed and the euro steadied in volatile trading on Wednesday before emergency talks between Germany and France and Greece to avert a Greek debt default.

Markets also reacted to news that ratings agency Moody's had downgraded two French banks over their exposure to Greek debt.

Polish Finance Minister Jacek Rostowski, whose country holds the rotating EU presidency, warned that the European Union could be destroyed by the eurozone crisis.

Chinese premier Wen Jiabao meanwhile forecast a tough road ahead for Europe's indebted countries.

After falling at the open, London's FTSE 100 stocks index rose 0.84 percent to 5,217.22 points in mid-morning deals. Frankfurt's DAX 30 won 0.80 percent to 5,208.34 points and in Paris the CAC 40 jumped 1.32 percent to 2,933.82. Madrid rallied 1.54 percent and Milan 1.64 percent.

The euro dipped to $1.3674 from $1.3682 dollar late in New York on Tuesday.

Asian stock markets dropped on Wednesday, with Tokyo losing 1.14 percent to end at the lowest point in more than 29 months. Sydney shed 1.64 percent, Seoul tumbled 3.51 percent and Taipei slumped 2.20 percent.

US stocks ended higher on Tuesday.

"To say markets have been turbulent would be an understatement," Simon Denham, head of Capital Spreads trading group, said on Wednesday.

"One minute they are up looking like they'll post a decent gain, the next they are down nursing heavy losses, before reversing the reversal and ending up giving investors an absolute headache."

Markets were awaiting a conference call due at 1600 GMT between the leaders of Greece, France and Germany as they try to navigate a way out of the crisis.

"Europe is in danger," Rostowski told the European Parliament in Strasbourg, France. "If the eurozone breaks up, the European Union will not be able to survive, with all the consequences that one can imagine."

European Commission head Jose Manuel Barroso agreed with the Polish minister.

Moody's ratings agency downgraded two top French banks in a new lurch for the eurozone crisis.

Moody's cut the rating for Credit Agricole bank, one of the biggest in Europe, from Aa1 to Aa2 and Societe Generale's from Aa2 to Aa3 because of fears over their exposure to Greek sovereign debt. It left French banking major BNP Paribas on negative watch.

Despite the downgrade, shares in Credit Agricole rose by 2.13 percent in early trading, while shares in Societe Generale and in BNP Paribas fell by about three percent.

"On the back of this morning's (downgrade) event the rumour circus in Europe is expected to continue today with markets looking ahead to this afternoon's scheduled conference call," said Michael Hewson, an analyst at traders CMC Markets.

"European leaders continue to wrestle, unsuccessfully so far, to get a co-ordinated policy response to the sovereign debt crisis and the prospect of a Greece default," he added.

Commerzbank analysts, commenting late on Tuesday, said: "The question of whether or not Greece will default is pretty much solved for the financial markets though. From the point of view of the markets a short-term default of Grece is more or less unavoidable.

"As a result, the forex market is more interested in the consequences of a default and as a result above all the question whether there is a risk of contagion effects for other countries."

Copyright AFP (Agence France-Presse), 2011