Shares hit on reports of French credit rating cut

Eurostoxx 50: 2,305.60 (-10.29)) Frankfurt DAX: 5,887.42 (+27.99) Paris CAC: 3,141.10 (-24.96)EUROPEAN STOCKS fell as concern that France may lose its top credit rating added pressure on the region's leaders to find a solution to the debt crisis and as China's economy grew at the slowest pace in two years.

BHP Billiton and Rio Tinto led mining shares lower as metals declined. BNP Paribas and Société Générale sank more than 3.5 per cent as Moody’s said France’s Aaa rating is under strain. Danone rose 2.2 per cent as it was said to be in talks to sell water assets to Japan’s Suntory Holdings.

National benchmark indexes retreated in half of the 18 western European markets. The UK’s FTSE 100 dropped 0.5 per cent, France’s CAC 40 fell 0.8 per cent, and Germany’s DAX advanced 0.3 per cent.

BNP Paribas, France’s biggest bank, declined 3.6 per cent to €29.94. Société Générale sank 5 per cent to €19.24. France’s Aaa credit rating is under pressure from deterioration in debt metrics and the potential for additional liabilities from Europe’s debt crisis, according to Moody’s.

Air France-KLM slid 2.5 per cent to €5.47 after the airline ousted Pierre-Henri Gourgeon as chief executive officer amid slumping earnings and questions regarding the role of pilots in a fatal crash.

Aixtron, a supplier to the semiconductor industry, sank 5.5 per cent to €9.97. The company’s third-quarter results were likely to be “disastrous”, CA Cheuvreux analyst Klaus Ringel wrote in a report.

Danone, the owner of the Evian and Volvic bottled-water brands, rose 2.2 per cent to €46.40 as three people familiar with the matter said the company was in talks to sell water assets to Japan’s Suntory Holdings. Danone also reported third-quarter revenue that beat estimates as it sold more baby food and medical nutrition products in China and Indonesia.

Bottled-water is a “strategic” business for Danone, chief financial officer Pierre-Andre Terisse said on a webcast, declining to comment further. Spokeswoman Midori Takahashi said Suntory was not formally in negotiations for Danone’s water assets.

Continental added 4.4 per cent to €53.07, erasing the previous day’s declines. The world’s fourth-largest tyremaker said Schaeffler Beteiligungsholding and Co’s voting rights rose to 36.14 per cent on September 30th. – (Bloomberg)