LONDON, Feb 14 (MNI) - European markets have pared early gains, which were spurred by a positive session in Asia overnight, following the resignation of Egyptian President Hosni Mubarak. Equity markets are now drifting into negative territory with CDS indices seeing moderate widening, both weighed by the financial sector and weakness in government bond spreads for the periphery countries in the eurozone.
The financial sector has seen some mixed newsflow today. Moody's highlighted once again the possibility of loss-sharing for holders of senior bank debt in Europe, which has weighed on sentiment despite Credit Suisse announcing a placement of CHF6 billion of Contingent Convertible debt with strategic investors this morning.
The benchmark iTraxx Xover index is currently around 1 basis point wider at the 401 bps level, with the underperformer being the Financial Subordinated index currently around 6 bps wider trading around the 280 bps level. Spreads for the periphery countries are all wider this morning, ahead of issuance by Spain and Italy this week and the EU finance ministers meeting in Brussels that gets under way today.
CDS spreads for the periphery countries are all wider today, with Ireland the underperformer currently around 16 bps wider at the +595 bps level, followed by Portugal currently 14 bps wider at the 455 bps level.