Eurostocks up with US, Ericsson sinks on downgrade

Leading European stocks edged higher in afternoon trade yesterday boosted by strong opening on Wall Street, but telecoms equipment maker Ericsson tumbled after Moody's cut its credit rating to junk status.

By 1401 GMT, the FTSE Eurotop 300 index of pan-European blue chips was up 0.6 per cent at 900,74, while the narrower DJ Euro Stoxx 50 added 0.1 per cent.

Shares in Sweden's Ericsson fell 18.8 per cent after Moody's Investors Service said it had downgraded to "Ba1" from "Baa3" Ericsson's long-term debt ratings, and lowered to "Not-Prime" from "Prime-3" the company's short-term debt rating.

The group said the underwriting of its $3.25 billion rights issue was not under threat after Moody's downgrade.

The Dow Jones Stoxx index for technology stocks was off 0.7 per cent.

In New York, the Dow Jones industrial average was up 0.6 per cent and the tech-laden Nasdaq Composite gained 1.8 per cent.

"US markets are crucial for the European equity markets, and the US is giving us a lead," said Mathew Wickens at ABN Amro bank.

Shares in French building materials group Saint-Gobain slumped 20 per cent on concerns about bleak full-year earnings and possible asbestos liability claims.

The sell-off in Saint-Gobain helped to drag the DJ Stoxx construction sector index 5.3 per cent down.

On the bright side, Europe's largest chemicals group BASF AG rallied 6.8 per cent on the back of a 500 million euro buy-back programme it kicked off on Friday.

Gains in BASF drove the DJ Stoxx chemicals index 1.5 per cent higher.