European stock markets weak in morning trading

Early trading in Europe has been skittish after a downgrade of France's long-term credit rating by Standard and Poor's on Friday.

Ireland's ISEQ index of shares was up 0.02% to 2,930.01, Britain's FTSE 100 was up 0.2% at 5,649.93 and Germany's DAX added 0.5% to 6,173.91. The CAC-40 in Paris rose just 0.1% to 3,199.57 on the first trading day. Markets in the US are closed for a public holiday today.

“There is growing risk of a disorderly default by Greece, with talks reportedly breaking down after private sector creditors could not agree on the coupon level of fresh bonds,” said Stan Shamu of IG Markets in Melbourne, Australia.

“With a €14.4bn bond repayment due in March, and without restructuring in place, the entire sum would fall, making it increasingly likely that Greece will default,” Shamu wrote in a email.

Some analysts said they believed that dealers had largely factored in the risk of a Greek default in their trades and were more concerned about what simmering tensions in the Middle East and Nigeria might do to oil prices.

The US is trying to rally global support for sanctions against Iran for its alleged efforts to develop nuclear weapons. Iran, the world’s fourth-largest oil exporter, has vowed to retaliate by shutting down the Strait of Hormuz, the passage for one-sixth of the world’s oil.

That could send prices skyrocketing and feed inflation in the US and potentially hinder its fragile recovery from the Great Recession.

Meanwhile, a threatened strike by oil workers in Nigeria, a top oil supplier to the US, has further complicated the picture. The threat is in response to the government’s decision to end fuel subsidies, which more than doubled the price of petrol in a country where most people live on less than two dollars a day.

“Inflation is just around the corner,” said Tom Kaan of Louis Capital Markets in Hong Kong. “That to me is a bigger concern than Europe. Europe isn’t going to be resolved in a year’s time or three year’s time. I think Greece will go into default and then you will have a two-tiered Europe.”