Markets wobble as Moody’s puts UK AAA rating in jeopardy

Markets have slipped into the red in early trading as Moody’s negative outlook for the UK’s AAA credit rating weighed on sentiment.

The UK's prestigious triple-A rating has been put on negative watch by the ratings agency, meaning there is a one in three chance it will be cut in the next 18 months.

The loss of the rating would be a bitter blow for Chancellor George Osborne, who has maintained it is the coalition's efforts to tackle the country's debt which has kept the UK's financial reputation intact.

However, this morning it spooked markets, with the FTSE 100 down 0.25% or 15 points, at 5,891, by 9am.

Cyclical stocks paid the price in early trading, in particular resource stocks which relinquished some of their recent gains.

Rio Tinto is the biggest faller, down 2.05% or 79p to £37.66, while Xstrata has lost 1% or 12p, falling to £12.01.

Moody's also warned on a number of European nations, putting France's AAA rating under threat alongside the UK's, while downgrading countries including Spain, Portugal and Italy.

As a result European shares were down, with the French Cac off 0.27% to 3,376 points, and the German Dax marginally down 0.05% to 6,734 points.