Eurostoxx 50: 2,083.38 (+46.74) Frankfurt DAX: 5,340.19 (+173.83) Paris CAC: 2,949.14 (+54.21)

FRENCH BANKS remained under pressure yesterday after Moody’s downgraded two of the country’s lenders citing exposure to the Greek economy.

The agency cut its rating on Société Générale’s debt and deposits by one notch to Aa3 from Aa2, and placed a “negative” outlook on its long term debt.

It reduced Crédit Agricole’s long-term debt and deposit ratings by one notch, to C from C+, and left on review for a potential further downgrade.

Although Moody’s stopped short of cutting the rating on BNP Paribas, it kept the bank’s Aa2 long-term ratings on debt and deposits on review for a possible downgrade.

As the session developed, the pace of the selling eased.

Christian Noyer, Bank of France governor, spoke up for his country’s lenders saying the downgrades were small, adding that the banks were well capitalised to withstand a Greek default.

Société Générale fell 2.9 per cent to €17.39, off its session low of €15.84. Crédit Agricole climbed back to end the session 1.2 per cent higher at €5.22.

BNP Paribas also climbed off its low mark after it announced plans to sell €70 billion in risk-weighted assets in a bid to raise capital as investors continued to fret about the funding position of French banks. It remained 3.9 per cent lower at €26.90.

Italian banks were higher with Intesa Sanpaolo up 3.4 per cent to €0.95 and Banca Popolare di Milano, which announced a capital raising on Tuesday, up 1.8 per cent to €1.39.

UniCredit, the country’s biggest lender, was down 1.6 per cent at €0.73 on reports that the company’s chief executive had discussed the possibility of a rights issue on Tuesday at a meeting with the bank’s strategic committee.

Finmeccanica, the Italian aerospace group, jumped 16.9 per cent to €5.26 after reports General Electric of the US was close to buying two of its divisions. Ansaldo, one of the transportation units reported to be up for sale, is 40 per cent owned by Finmeccanica. Its shares soared 20.3 per cent to €6.62.

In other bank sector activity, Swedbank fell 5.5 per cent to SKr73.15 after the Swedish lender said it had halted its share buyback programme. – (Copyright The Financial Times Limited 2011)