LONDON - Another mass downgrade of the creditworthiness of European countries had little market impact Tuesday as investors continued to predict that Greece would soon get its hands on vital bailout cash to avoid a ruinous bankruptcy.
Late Monday, Moody's slapped credit downgrades on six European Union countries, including Italy and Spain, and warned that top-rated Britain, France and Austria could see their ratings cut. As well as blaming the increasingly weak economic outlook in Europe, the agency cautioned over the uncertainly over the reform process in the 17-nation eurozone
"Not quite the St. Valentine's Day Massacre, more of a drive-by shooting," said Gary Jenkins, managing director at Swordfish Research.
Analysts said that the impact was fairly negligible given that Moody's was just echoing decisions made last month by its rivals Standard & Poor's and Fitch -- the borrowing rates of those countries affected by Moody's pronouncements were trading within normal ranges.
Government debt ratings can play a major role in countries' borrowing costs because a lower rating often means countries pay higher interest rates on their bonds to attract investors -- it's not always the case though; the United States has actually seen its borrowing rates fall since Standard & Poor's stripped it of its triple A rating last August.
The reaction in stock markets was muted to say the least. Stocks were actually trading higher as investors remained confident that Greece would get its second bailout despite signs that the eurozone countries, led by Germany, aren't quite ready to back the release of funds to the cash-strapped euro country.
"They are trying to take a hard line but if they do not continue to lend to Greece then all the money lent/invested so far gets written off, which would be a PR disaster, let alone what would happen in Greece," said Swordfish's Jenkins.
In Europe, the FTSE 100 index of leading British shares was up 0.2 per cent to 5,915 while Germany's DAX rose 0.6 per cent to 6,779. The CAC-40 in France was 0.4 per cent higher at 3,396.
The euro was also well-supported, trading 0.3 per cent higher at $1.3205.
Wall Street was poised for a solid opening with both Dow futures and the broader Standard & Poor's 500 futures up 0.1 per cent.
The markets will continue to focus on developments on Greece and in particular Wednesday's meeting of euro finance ministers in Brussels, where an agreement in principle to give Greece the money is at least is expected.
"Don't be surprised if there is a last-minute glitch," said Neil MacKinnon, global macro strategist at VTB Capital.
On Sunday, Greece's parliament approved sharp cuts in civil service jobs, welfare and the minimum wage, required by international leaders for a C130 billion ($171 billion) bailout that the country needs to avoid defaulting on its debt next month.
Earlier in Asia, Japan's Nikkei 225 index rose 0.6 per cent to 9,052.07, its highest close since Sept. 1. The gains came as the Bank of Japan, following a policy meeting, announced it would buy more government bonds while keeping short-term interest rates near zero to boost the economy.
The U.S. dollar rose to a three-week high against the yen after the central bank's announcement, helping Japan's exporters, whose earnings have been trampled by a strong home currency. Toyota Motor Corp. jumped by 1.8 per cent and Suzuki Motor Corp. was 1.5 per cent higher. Canon Inc. gained 1.5 per cent.
Elsewhere, Hong Kong's Hang Seng rose 0.2 per cent to 20,917.83 and South Korea's Kospi was 0.2 per cent lower at 2,002.64. Australia's S&P/ASX 200 lost 1 per cent to 4,242.80.
Mainland Chinese shares edged lower with the benchmark Shanghai Composite Index down 0.3 per cent at 2,351.86. The Shenzhen Composite Index was virtually unchanged at 912.31.
Oil prices pushed further above the $100 a barrel mark as equities advanced --benchmark oil for March delivery was up 45 cents at $101.36 per barrel in electronic trading on the New York Mercantile Exchange.
