FTSE treads water following fresh Moody’s warning

London’s leading share index has made a subdued opening in early trading, with investors returning cautiously to stocks after yesterday's sell-off.

Markets sold-off sharply on Monday after ratings agency Moody's reiterated it would review the ratings of all 27 EU nations in the first quarter of next year.

This morning, investors were wary, with the FTSE 100 up just 0.14% or 7 points to 5,435 by 9.50am.

Other leading European markets have also opened flat with the German Dax up 0.4% to 5,809, while the French Cac is down 0.1% to 3,086.

Overnight in the US, the Dow Jones fell sharply, losing 1.3%, while London's FTSE closed 1.83% lower on Monday. At one point yesterday, the Dow was down 243 points but recovered slightly in late trading.

Ratings agency Moody's said yesterday last week's EU summit offered "few new measures" to deal with the debt crisis in the eurozone.

"The absence of measures to stabilise the credit markets over the short term means that the euro area, and the wider EU, remain prone to further shocks and the cohesion of the euro area under continued threat," the agency said in a statement.

Last week another ratings agency, Standard & Poor's, said it may downgrade the ratings of 15 of the 17 eurozone countries, including six of those with AAA ratings.

Responding to Moody's warning, French President Nicolas Sarkozy said that if France lost its AAA credit rating, it would be "one more difficulty, but not insurmountable".

"If they withdrew it, we would face the situation with sang-froid and calm," he told Le Monde newspaper.