LONDON (SHARECAST) - Europe extended its losses over the midday mark, led lower again by the banking sector as euro area concerns continue to hit the headlines. The automotive industry is also on the decline. Ratings agency Moody’s has slashed its credit rating on Ireland by five notches to Baa1 from Aa2 amid worries over banking liabilities and economic prospects. Moody’s also said that it will review Greece’s rating, as a possible downgrade sparks fears among investors, sending shares in National Bank of Greece down. No such problems in Germany where the Dax recovered some moderate early gains after the Ifo Institute’s business-climate gauge rose to a new record of 109.9 in December, up from a previous record of 109.3 in November. The number surpassed economists’ predictions of 109.4, reflecting confidence in the robust growth of the economy. Germany’s GDP is estimated to rise by 3.5% over the next twelve months, around double the average growth of the EU as a whole. The Dax is Frankfurt is down 8 at 7,016, the Cac in Paris is 8 lower at 3,881, while the Ibex in Madrid trades 89 under at 9,921. Banco Popular Espanol, Dexia and Credit Agricole are among the banks falling lower. News of Spain’s possible credit rating downgrade continues to weigh on many minds as its banks’ rising financing costs are likely to have an impact on returns on mortgage loans. The automotive sector is falling lower lead by German carmakers BMW, Daimler Chrysler and Volkswagen which are among the hardest hit, while Peugeot is posting losses on the French index. MAN SE, however, is the highest riser in the Dax after Nomura reported that the group remains its “only ‘buy’ in the sector,” increasing the target price.

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