European markets flat after France's downgrade

There was no “sound and fury” on European markets today despite the loss of France’s gold-plated AAA credit rating and speculation over Greece’s future in the eurozone.

The downgrade of France and several other countries by Standard & Poor’s came as little surprise to markets, while rival agency Moody’s helped sentiment by saying it will maintain the country’s top-tier rating for the timebeing.

The CAC-40 in Paris and Germany’s Dax were flat and 0.3% higher respectively, while the FTSE 100 Index stood 6 points ahead at 5642.9.

There was no direction from the US, where the market was closed for Martin Luther King day.

David Jones, chief market strategist at IG Index, said: “Those hoping for sound and fury as markets get their chance to react to Friday’s S&P downgrade of most of the eurozone have been sorely disappointed.”

The steady performance came despite fresh speculation that Greece is on the brink of leaving the single currency because it will not have enough funds for a £12bn bond that has to be repaid on March 20.

Meanwhile, banks deposited a record £493.3bn at the European Central Bank on Friday night in a sign the eurozone banks remain concerned over the government debt crisis.

The overnight figures released exceed the previous record of £490bn deposited on Thursday.

Banks were under pressure with Barclays down 3.33p at 197p and Lloyds Banking Group off 0.7p at 28.8p. However, Royal Bank of Scotland continued its recent rally, sparked by a positive reaction to its restructuring plans, rising 0.3p to 24.4p.

Much of the attention of investors was focused on cruise ship company Carnival after the disaster involving the Costa Concordia off the coast of Italy.

Some analysts estimated the potential impact at up to one billion US dollars, while Carnival said the grounded vessel would be out of service until at the least the end of its financial year to November 30, costing it between $85m and $95m this year.

It said it was too early to calculate other costs but shares slumped 17% or 383.2p to 1864.8p – adding to the fall of 30% since the start of 2011.

Dairy company Robert Wiseman jumped 18% after its board backed a £280m takeover offer from German-owned yoghurt maker Muller Dairy.

Shares were up 60.1p to 388.1p after gains of 34% on Friday when Wiseman admitted it was in talks with Muller. The deal will trigger a £98.1m windfall for the Wiseman family, who own 35% of the shares.

Publishing firm Bloomsbury saw its shares climb 2p higher to 99p after it reported a strong Christmas quarter, with sales of ebooks up 38% on a year earlier.

The update helped boost Penguin owner Pearson, which topped the FTSE 100 Index risers board with an improvement of 3% or 34p to 1251p.