Europe mid-morning: Greek exit poses a major risk for Spain, Moodys' says

-Moody's confirmed Spain's government bond rating, with a negative outlook

-Conflicting reports regarding frictions ahead of EU summit

-Spanish risk premium drops below 400bp

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-Italy 2 year bond yields fall below 2 per cent

FTSE-100: 0.19%

Dax-30: 0.14%

Cac-40: 0.31%

FTSE-Mibtel 30: 0.61%

Ibex 35: 1.31%

Stoxx 600: 0.05%

European equities are now registering slight gains ahead of today's avalanche of US company results (and a negative reaction to those out from IBM and Intel overnight) following ratings agency Moody's decision last night to maintain Spain's investment grade rating on the country's debt.

Worth noting, amongst the reasons cited by Moody's for its decision are that: "the rating agency believes that Spain will likely apply for a precautionary credit line from the European Stability Mechanism (ESM)."

Also worth pointing out, Moody's does not believe that the above would lead -in and of itself- to a downgrade, although it does warn that certain events could still see the rating drop to "junk," with a potential exit of Greece from the single currency area posing a major event-risk.

Danone is down by 4% after reporting a slowdown in revenues at its main dairy division.

Dutch semiconductor equipment maker ASML is dropping 2% after forecasting fourth-quarter sales that trailed behind projections. As well, the company will acquire Cymer for $2.6bn.

PSA Peugeot is advancing 2% as Le Figaro said the French government may bail out the automaker's credit unit.

From a sector stand-point the best performers are now to be found in the following industrial groups within the DJ Stoxx 600: Basic resources (1.1%), Construction&Materials (0.82%) and Automobiles (0.62%).

Eurozone construction output grew by 0.7% month-on-month in August, following a fall of 0.3% in the month before.

Sharp rise in the single currency

The euro/dollar is now sharply higher, at 1.3098.

Front month Brent crude futures are now down by 0.202 dollars to the 113.78 dollar mark.

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