Moody’s downgrades two French banks over exposure to Greek debt

MOODY’S has cut the credit ratings of two French banks because of their exposure to Greece’s debt, highlighting growing risks to Europe’s financial sector from a deepening eurozone sovereign debt crisis.

But the euro and European stocks were lifted by an announcement by the head of the European Commission that it would soon present options for issuing a common eurozone bond despite huge political hurdles, especially in Germany.

The ratings agency’s one-notch downgrade of Société Générale and Credit Agricole came hours before the leaders of Greece, France and Germany held a video conference on measures to head off a potential Greek default, which has prompted rising global alarm.